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NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 

EVIDENCE STUDY 

NO. 25 

OF 

THE MOTION PICTURE INDUSTRY 

Prepared by 
DANIEL BERTFAND 



November, 1935 



PRELIMINARY DRAFT 
(NOT FOR RELEASE: FOR USE IN DIVISION ONLY) 



Monofzrapii 



LIBRARY OF CONGRESS I 

OCT 1 2 1336 1 

DIVISION OF DOCUMENTS | 



The EVIDENCE STUDIES were originally planned as a means of gathering 
-evidence "bearing upon various legal issues which arose under the National 
1 Industrial Recovery Act. 

These studies have value quite aside from the use for which they were 
originally intended. Accordingly, they are now made available for confidential 
use within the Division of Review, and for inclusion in Code Histories* 





The full list of the Evidence Studi 


e s is 


as follows: 


i. 


Automobile 'Manufacturing Ind. 


23. 


Mason Contractors Industry 


2. 


Boot and Shoe Mfg. Ind. 


24. 


Me n ' s Clo thi ng Indus t ry 


3. 


Bottled Soft Drink Ind. 


25. 


Motion Picture Industry 


4. 


Builders' Supplies Ind. 


26, 


Motor Bus Mfg. Industry (Dropped) 


5. 


Chemical Mfg. Ind. - 


27. 


Needlework Ind. of Puerto Rico 


6. 


Cigar Mfg. Industry 


28. 


Painting & paperhanging & Decorating 


7. 


Construction Industry 


29. 


photo Engraving Industry 


8. 


Cotton Garment Industry 


30. 


Plumbing Contracting Industry 


9. 


Dress Mfg. Ind. 


31. 


Retail Food. (See No. 42) 


10. 


Electrical Contracting Ind. 


32. 


Retail Lumber Industry 


11 . 


Electrical Mfg. Ind. 


«.j3 . 


Retail Solid Fuel (Dropped) 


12. 


Pa"b. Metal prod. Mf g. , etc. 


o4 . 


Retail Trade Industry 


13. 


Fishery Industry 


35 , 


Rubber Mfg. Ind. 


14. 


Furniture Mfg. Ind. 


o . 


Rubber Tire Mfg. Ind. 


15. 


General Contractors Ind. 


37. 


Silk Textile Ind. 


16. 


Graphic Arts Ind. 


33. 


Structural Clay Products Ind. 


17. 


Gray Iron Foundry Ind. 


lib . 


Throwing Industry 


18. 


Hosiery Ind. 


40. 


Trucking Industry 


19. 


Infant's & Children 1 s Wear Ind, 


41. 


Waste Materials Ind. 


20. 


Iron and Steel Ind. 


42. 


Wholesale & Retail Food Ind. (See No. 


21. 


Leather 


43. 


Wholesale Fresh Fruit & Veg. 31) 


22. 


Lumber & Timber Prod. Ind. 







In addition to the studies brought to completion, certain materials have 
been assembled for other industries. These MATERIALS are included in the series 
and are also made available for confidential use within the Division of Review 
and for inclusion in Code Histories, as follows: 



44. Wool Textile Industry 49. 

45. Automotive Parts & Equip. Ind, 50. 

46. Baking Industry 51. 

47. Canning Industry 52. 

48. Coat and Suit Ind. 53. 



Household Goods & Storage, etc. (Drop-' 
Motor Vehicle Retailing Trade Ind, ped) 
Retail Tire & Battery Trade Ind. 
Ship & Boat Bld'g. & Repairing Ind, 
Wholesaling or Distributing Trade 



L. C. Marshall 
Director, Division of Review 



CONTENTS 



Page 

Foreword 1 

PART I: INTRODUCTION 

CHAPTER I ~ THE OP THE INDUSTRY 2 

Definitions of the Industry 2 

Description and Scope of the Industry 2 

Assets. . 3 

Cap i t al Inve s tn ent 4 

Interstate Character of the Industry. ....... 4 

PART II: PRODUCTION 

CHAPTER I ~ THE NATURE OP THE DIVISION 6 

Total Number of Establishments 6 

ITumber of Establishments "by Principal States. ... 6 

ITumber of Li embers and Size of Concerns 7 

Cross and Llet Income. , 7 

let Income "by Liajor Companies 8 

Total Cost of Production 9 

Volume of Production. 9 

Total Domestic and Poreign Releases 9 

Production of "Peat-ares". 10 

Production of "Shorts" 11 

"Box-Office Rating" of Producers. 11 

CHAPTER II ~ LABOR STATISTICS 

Total Number of Employees 13 

Number of "Extras" 13 

Seasonal Variation in Employment, 14 

Total Annual Wages. 15 

Annual Wages by Principal States. .... 16 

Salaries and Wages as a Per Cent of Cost 

of Production. ..................16 

Wages of Extras 17 

Average Hourly Wage Rate. 18 

Average Hours Worked per Week 18 

Child Labor 19 

Employees by Principal States .... 19 

Total Employees 19 

Wage Earners .20 

(Continued) 



8976 



CONTENTS (Continued) 



Page 



CHAPTER III ~ MATERIALS , .21 

Cost of Principal Materials Used. 21 
Source of Equipment and Supplies. ......... 21 

CHAPTER IV - UNFAIR TRADE PRACTICES. 23 

Enticement of Talent and Activities of Agents ... 23 

CHAPTER V - GENERAL INFORMATION f 24 

Exports 24 

Advertising 24 

Productive Caoacity .... ....... 24 

Trade Associations ..... 24 

notion Picture Producers and 

Distributors of America, Inc. ....... 24 

The Academy of Motion Picture 

Arts and Sciences ............. 24 

Trade Union Activity 25 

PART III: DISTRIBUTION 

CHAPTER I - THE HATURE OP THE DIVISION. ............ 26 

History and Scope of Division ...... 26 

Origin of Film Exchange ... ....... « 26 

Developments in Film Distribution ...... 26 

National and "State Right ,r 

Distribution. 26 

Producers as Film Distributors. ....... 27 

Present-Day Film Distribution 27 

Total ITumber of Exchange Establishments ...... 28 

Number of Exchange Establishments by 

Principal States 28 

Volume of Business by Principal States, 28 

Number of Establishments by Type of 

Exchange .... ........,.*...., 29 

Volume of Business by Type of Exchange. ...... 29 

CHAPTER II - LABOR STATISTICS *.,... 31 

Average Annual Number of Employees, ........31 

Total Number of Employees by Types 

of Exchanges .«,.,.. 31 

Average Annual Payrolls .«•♦..,..,.,.. 31 

Per Cent Salaries and Wages are of 

Total Expense f ... 31 



( Continued) 



8976 



— ii- 



CONTENTS ( Continued) 

Page 



CHAPTER III - UNFAIR TRADE PRACTICES 32 

Block Booking and Blind Booking 32 

Forcing Short Subjects with Features ....... 33 

Overbuying. .........33 

CHAPTER IV - GENERAL INFORMATION 34 

Trade Association Activity ............ 34 

PART IV: EXHIBITION 

CHAPTER I - THE HATERS OP THE DIVISION 35 

History and Description of Division .35 

The Development of Hot ion Picture 

Theatres . 35 

The Development of the Entertainment 

Program. .... .....35 

Entrance of Produ.cers into the 

Exhibition Division. .35 

Classes of Exhibitors ,35 

Total Number of Theatres 36 

Number of Theatres by Principal States 36 

Number of Theatres Open and Closed 37 

Seating Capacity. . 37 

Number of Theatres and Number of Seats 

Classified by Type of Ownership 39 

Total 'Theatre Receipts and Attendance 40 

Theatre Receipts by Principal States . 41 

Competition with Other Industries. . 41 

Expenditures for Theatre Construction. ...... 41 

Financial Condition 42 

CHAPTER II - LABOR STATISTICS 43 

Number of Employees ...........43 

Total Annual Payrolls. 43 

Total Annual Payrolls as a Per Cent of 

Total Receipts 44 

Nunber of Wage Earners and Total Annual 

Wages by Principal States. 44 

Wages and Hours .......45 

In Principal Cities 45 

In Washington, D. C 46 



( Continued) 



8976 



— iii-» 



_ _ . 



C01TTEITTS (Concluded) 

Page 



CHAPTER III - MATERIALS 49 

lTum"ber of Films Used 49 

Per Cent of Consumer's I.iotion Picture Dollar 

Spent on Film Rental .49 

CHAPTER IY - U1EA.IR TRADE PRACTICES 51 

Clearance and Zoning. .«...., 51 

Other Unfair Trade Practices 51 

Trade Associations. ., 52 

The Lotion Pictiire Theatre Ormers 

of America. ..... .....52 

Allied States Association of 

Hot ion Picture Exhibitors .52 

Trade Union Activity 52 

International Alliance of Theatrical 
State Employees and Lotion Picture 
Machine Operators of the United States 
and Canada. ........ .......52 

APPSITDIIC f 53 

Exhibit A - Persons Qualified as Experts on the Entire Industry . 53 

Exhibit 3 - The Advent of Sound in Lotion Pictures . 55 

Sound in Exhibition 55 

Sound in Production 56 



8976 



— iv— 



LIST OP 
TABLES 

Page 

TABLE I - Assets of Motion Picture Producers, 1930-1933. ... 2 

TABLE I A - Assets of Motion Picture Theatres, 1930-1933 ...... 4 

TABLE II - Stotal Number of Establishments, for Census 

Years, 1921-1933 6 

TABLE III - lumber of Establishments, by Six Principal 

States 7 

TABLE IV - Gross Income and Net Profit or Loss, 1927-1932 ... 8 

TABLE V - Consolidated Net Income or Loss for Six 

Major Motion Picture Companies, 1932-1934 8 

TABLE 71 - Total Cost of Production, for Census Years, 

1921-1933 9 

TABLE VII - Number of Domestic and Foreign Motion Picture 
Features Released in the United States, 
1927-1934 10 

TABLE VIII - Features Released "by Major and Independent 

Domestic Companies ........ ... 10 

TABLE IX - Total Number of Shorts Produced, 1930-1931 

to 1954-1935 11 

TABLE X - Estimate of Box Office Strength of Feature 
Pictures, for each of Eight Major Companies 
and All Independents, 1933 and 1934 12 

TA3LE XI — Average Annual lumber of Salaried Emplo^.-ees 

and of TTage Earners ..13 

TABLE XII - lumber of Placements and Wages of "Extras" 

Registered vrith the Central Casting Corporation, 
1926-1934 \ 14 

TABLE XIII - Number of Wage Earners, by Months, 1929 and 1933 . . 15 

TABLE XIV - Total Annual Salaries and Wages, 1929 and 1933 ... 16 

TABLE XV - Annual Wages, by Three Principal States, 

1929 and 1933 " . 16 

(Continued) 



8976 



— v— 



TABLES (Continued) 



Page 

TABLE XVI - Total Cost of Production, Annual Salaries 

and Annual Wages, 1929 and 1933 17 

TABLE XVII - Distribution of Placements of Extras "by 
the Central Casting Corporation at 

Specified Daily Wage Pates, 1930 and 1933 18 



TABLE XVIII - Lumber of Establishments and Number of 
Wage Earners, Classified by Number of 
Eull-Time Hours Worked per Week, 1929 ....... 19 

TABLE XIX - Average Annual Number of Employees, by 

Three Principal States, 1929 and 1933 19 

TABLE XX - Average Annual Number of Wage Earners, 

by Three Principal States, 1929 and 1933 20 

TABLE XXI - Total Cost of Production and Cost of 

Materials j Euel, and Purchased Electric 

Energy 21 

TABLE XXII - Number of Establishments Producing Photo- 
graphic Apparatus and Supplies, by 

Principal States » 22 

TABLE XXIII - Exports of Motion Picture films, 1929 and 1934 . . 24 

TABLE XXIV - Number of Exchanges and Volume of Business 

Handled, by Six Principal States, 1929 28 

TABLE XXV - Number of Exchanges, and Number of Empl03^ees, 

by Principal Types of Exchanges, 1929 29 

TABLE XXVI — Volume of Business, Salaries, Wages and 
Total Expenses, by Principal Types 

of Exchanges, 1929 30 

TABLE XXVII - Average Annual Number of Employees 

and Average Annual Payrolls, 1929 . „ 31 

TABLE XXVIII- Number of Motion Picture Theatres, 

by Principal States 36 

TABLE XXIX - Sound and Silent Motion Picture Theatres, 
Classified as to Whether Open or 

Closed, 1929-1935 "38 



( Continued) 



8976 



-vi- 



TABLES (Concluded) 



Page 



TABLE 



TABLE 



TABLE 



TABLE 



TABLE 



TABLE 



:i - 



TABLE XXXII - 



TABLE XXXIII - 



TABLE XXXIV - 



[XXV 



TABLE XXXVI - 



TABLE XXXVII 



TABLE XXXVIII - 



TABLE XXXIX - 



XL - 



XL I - 



XLII - 



Total limber of Seats in Motion 

picture Theatres, 1931-1935 39 

Number of Motion Picture Theatres, 

Classified Toy 'Type of Ownership, 1933-1935. . . 40 

Lumber of Hot ion Picture Theatre Seats, 
Classified by Type of Ownership > 1933-1935. . . 40 

Estimated Total Bo "-Office Receipts, Average 
Admission Prices, and Attendance, 1929-1934 . . 41 

Annual Expenditure in Theatre Construction, 

1929 - March, 1935 42 

Gross Income, let Profit or Loss, 1927-1932 . . 42 

Annual Average Lumber Employed, Pull a.nd 
Part-Time, "by Types of Theatres, 1933 43 

Total Payrolls, Pull and Part-time, 

by Types of Theatres, 1933 44 

Total Receipts, ifamber of Pull-Time Employees 

and. Payrolls, Classified by 10 Principal 

States, 1933 \ .... 45 

Wage Scales and Hours Worked per Week by 

Unionized Projectionists, Classified by 

Ifamber of Cities, 1933 46 

Average Weekly Hours and Wages of Employees 

in 11 Neighborhood Motion Picture Theatres 

of Washington, D. C. , by Branch of Work 

and Occupation, 1951 .47 

Average Weekly Wages in Different Types of 

Motion Picture Theatres of Washington, P. C. , 

by Branch of Work and Occupation, 1951. .... 48 

Per Cent of the Consumer's Motion Picture 

Dollar Accounted for by the Chief Divisions 

of the Industry, 1933 50 



8976 



-Vll- 



MOTION PICTURE INDUSTRY 



Foreword 

The date, 'presented in this report have been assembled from "both government 
and private sources. Host of the government data used have "been taken from 
publications of the Bureau of the Census, but data have also been taken from 
reports of the Bureau of Labor Statistics and the Bureau of Internal Revenue. 
Among the private sources, the most important are the Motion P i cture Almanac , 
the Film D ail y Yearb ook, reports of the Standard Statistics Company, and the 
trade association, the Motion Picture Producers and Distributors of America, 
Inc . 

The organization of this study is somewhat different from that called for 
in the Outline for Evidence Studies. The Industry as codified included the 
production, distribution, and exhibition of moving pictures, and it has been 
considered advisable to follow the Outline through separately for each of these 
divisions. The present study therefore consists of four parts: Part I, Intro- 
duction, in which certain material pertaining to the Industry as a whole is 
presented; and Part II, Production; Part III, Distribution; and finally, Part 
III, Exhibition. The particular Census publications used in describing each of 
the three main divisions of the Industry are as follows: Production, C ensus 
of Man ufa ctu res; Distribution, Census of Uholesa l e Di s tributi on; and' _ 
Exhibition, Census of American Busine ss, ."Services", Amusements, and Hotels", 

The Census data are considered roughly applicable to the appropriate 
division of the Industry as codified. The fact that the Census coverage toes 
not include the smaller establishments is not held significant in this Industry. 
As pointed out in the text, however, Census data and those from private sources 
often indicate large discrepancies which are presumably due to the fact that 
the latter are frequently estimates and to difference in the coverage of the 
two sets of date.. 



8976 



PART I: INTRODUCTION 



Chapter I. The Nature of the Industry 

Definitions of the Industry 

The Motion picture Industry, as defined "by the Code of Pair Competition 
for the Industry, includes, 

".... without limitation, the production, distribution, or 
exhibition of motion pictures and all activities normally related 
thereto, except as specifically excepted from the operation of the Code." 

The limitations in the scope of the Code are as follow: 

"Nothing in this Code shall "be deemed to apply to the pro- 
duction, distribution, or exhibition of motion pictures on film 
of recognized substandard widths, or to slide films, or to non- 
theatrical motion pictures designed primarily for educational, 
scientific, industrial, commercial, advertising, selling, or other 
non- theatrical purposes, or to television of motion pictures, 
provided that the commercial production, distribution, or exhibi- 
tion of such films shall be subject to investigation by the Code 
Authority to determine whether such production, distribution, or 
exhibition of such films is unfair competition to an established 
motion picture theatre or theatres. If found to be unfair com- 
petition, the Code Authority shall promulgate rules and regulations 
governing such unfair competition." 

The Code covered "actor employees in vaudeville and presentation motion 
picture theatres" in "both permanent and traveling companies of artists play- 
ing presentation and vaudeville houses," but it did not cover "amateur" shows, 
"rep," "tab," "tent," "wagon," "truck" and "medicine" shows, "show-boat" or 
"burlesque," as these terms are understood in the theatre. 

The Industry as defined by the Census of Manufactures embraces, 

".... all processes and activities connected with the pro- 
duction of motion pictures, such as the photography of scenes, the 
development of exposed films, the printing of projection films, and 
other studio and laboratory work necessary in connection with the 
preparation of projection films for use." 

Since Census of Manufactures data thus cover only motion picture pro- 
duction, they are not applicable to the entire Industry as defined by the 
Code, but only to the production branch of the Industry which is described in 
Part II of this study. The remaining branches of the Industry, distribution, 
and exhibition, are covered by the Wholesale Census and the Census of Service, 
Amusements, and Hotels. 

Description and Scope of the Industry 

The Industry as codified is composed of three major divisions of activity: 
production, distribution, and exhibition. These three economic divisions of 
this Industry are closely inter- related with and dependent upon each other. 
The production division covers all of the processes and activities involved in 



8976 



the making of motion pictures. It includes the preparation and photography of 
scenes; the developing of exposed films; the printing of projection films; and 
other studio and laboratory work required in the preparation of positive films 
for use. The distribution division involves the "renting" or "leasing" of 
films to exhibitors; the maintenance and physical distribution of the films, 
and the collection of due accounts. It also includes the outright sale of 
finished films and the sale of advertising materials. The exhibition division 
includes the commercial exhibiting of the finished films in the theatres; and 
also vaudeville and presentations given in conjunction with motion pictures. 

This Industry, which has assumed a position of unusual importance because 
of its far-reaching influence upon social and economic standards and conduct, 
is characterized by rapid growth by the possibility of radical changes through 
technical developments in the film and related industries by the geographical 
concentration of production. It's further characterized by the large degree 
of integration of its three main divisions, and the individuality in the in- 
dustrial practices which it follows. 

Production, distribution, and exhibition are both horizontally and verti- 
cally integrated and the concentration of corporate ownership in the hands of 
a few large companies provides an economic division of the Industry between 
what are known as "major" and "independent" interests. The economic conse- 
quences of this concentration are reflected in nearly all problems of the 
Industry. 

Assets 

Tables I and IA sho',", T the assets of motion picture producers and exhibitors 
for the years 1930 through 1933. Fixed assets constitute the largest type in 
both the production and exhibition divisions. Total a.ssets of producers drop- 
ped from $934,000,000 in 1930 to $249,000,000 in 1933, while in the exhibition 
division total assets rose during the same period from $619,000,000 to $1,~ 
076,000,000, The number of concerns reporting in the production division 
averaged around 175 each year, whereas in the exhibition group the number 
rose steadily from 1,889 in 1931 to 2,368 in 1933. 

TABLE I 

Assets of Motion Picture Producers, 1930-1933 
(Dollars In Thousands) 





1930 


1931 


1932 


1933 


Number Reporting 


182 


170 


177 


181 


Total Assets 


$933,847 


$849,916 


$411,622 


$248,824 


Current 

Investments 

Fixed 

Miscellaneous 


228,871 
251 , 320 
384,421 
69,235 


192,911 
220,408 
371,766 
54.831 


54,015 
109,593 
218,629 

29,385 


42,057 
18 , 543 
163.^40 
24' 4 584 



Source: Bureau of Internal Revenue, tabulation sheets and published reports 
(Statistics of Income), 



8976 



. -TMtfflamiirrmrwMMidBBiii 




-4- 



TA3LE I A 



Assets 


of I.iotion Pictur 


e Theatres, 


1930-1933 






(Dollars In 


thousands ) 









1930 


1931 


1932 


1933 


Number Reporting 


1,889 


1,809 


2 , 152 


2,368 


Total Assets 


$618,792 


$717,307 


$986,584 


$1,076,486 


Current 


102,404 


119,728 


205,919 


255,927 


Investments 


53,340 


68 , 143 


173,753 


244,584 


Fixed 


389,494 


470,433 


523 , 241 


490,536 


Miscellaneous 


73,554 


59,003 


83,771 


75,339 



Source; Bureau of Internal Revenue, tabulation sheets and published reports 
(Statistics of Income)., 



Cam tal Invo stment 

According to the Motion P icture Alma nac the capital investment of the 
Industry stood at $2,000^000,000 in each of the years from 1929 to 1935, with 
the exception of 1934 when the figure was placed at $1,750,000,000, The invest- 
ment in studios is roughly $100,000,000; the investment in the distribution 
branch of the Industry is something between $10,000,000 and $20,000,000; while 
that for the exhibition branch of the Industry lies between $1,630,000,000 and 
$1,880,000,000. In other words, the investments in production or distribution 
are insignificant in comparison with the investment in exhibition. In a study 
made recently by a group of architects, Messrs. Lamb, Rapp, Alschlager, Eberson 
and Schultz, it was estimated that $1,460,000,000 has been spent to date in the 
building of theatres exclusive of those parts of theatre buildings given over 
to office space. 1/ 

Interstate Character of the Industry 

In the making of films, numerous writers, actors, actresses, directors, 
cameramen, and other artists and artisans, are assembled from many different 
states and foreign countries. Great quantities of unercoosed films and large 
quantities of scenery, costumes, paraphernalia, and properties are transported 
from many different states to the studios located in those few where motion 
pictures are produced. 

The distributors enter into contracts for leases with exhibitors for the 
exhibition of films throughout the United States through the media of corres- 
pondence, branch offices, and salesmen. Thus film contracts which are entered 
into between residents of different states, involve the leasing of a commodity 
manufactured in. one state and transported to and used in another state. 



1/ Verbal statement by Mr. David Palf reyman of the Theatre Service Division of 
the Motion Picture Producers and Distributors of America (June, 1935), 

8976 



After the films are produced, they are packed into metal containers, and 
are transported by parcel post, express trucks and other common carriers, from 
the studios and laboratories to exchanges, then to the theatres in cities and 
towns of the country. After display to the public, the films are returned to 
the exchanges for redistribution to other theatres, or are forwarded to other 
exhihitorso Thus, there is a constant current of trade and commerce in films 
through the states,, 



8976 



-6- 



PART II: PRODUCTION 

/ 

Chapter I. The Nature of the Division 

Total Number of Establishments 

Table II indicates the number of establishments engaged in the produc- 
tion of motion pictures, It will be noted that in the first Census taken 
after the depression years of 1921 and 1933, the number of establishments 
showed a marked decrease in each instance. 

T&BIE II 



Total Number of Establishments, for 
Census Years, 1921-1933 



Year 


Number 


Per Cent Change 
from Preceding Year 


1921 


127 




1923 


97 


-23.6 


1925 


132 


+36.1 


1927 


142 


■»• 7.6 


1929 


142 


no change 


1931 


140 


- 1.4 


1933 


92 


•—34 1 3 



Source: Census of Manufactures , 1929 and 1933, 
"Motion Pictures, not Including Pro- 
jection in Theatres." 



Number of Establishments by Principal States 

An examination of Table III shows that more than 80 per cent of all 
motion picture establishments are located in six states. In 1929 California, 
the leading state, accounted for 41 per cent of all establishments and New 
York accounted for 21 per cent. By 1931 California had gained relatively 
and New York had lost, while in 1933 the reverse was true. The concentra- 
tion in the six states was more marked in 1931 and also in 1933 than in 1929. 



8976 



TABLE III 



Number of Establishments, "by Six Principal States 







1929 

J- >J CJ *s 




1931 




1933 


State 


1M Lull UC1 




1M LLiU UC1 


Ppt* (jPnt 


Number 


per Cent 






U X 1UI/ d J- 




of Total 




of Total 


U. S. Total 


142 


100.0 


140 


100.0 


92 


100.0 


California 


58 


40„9 


71 


50.7 


39 


42.4 


Illinois 


8 


5.6 


7 


5.0 


8 


8,7 


New Jersey 


6 


4.2 


5 


3.6 


3 


3.3 


New York 


30 


21.1 


26 


18,5 


24 


26.0 


Ohio 


8 


5.6 


6 


4.3 


3 


3.3 


Pennsylvania 


5 


3.6 


6 


4.3 


1 


1*1 


Total, 6 States 


115 


81.0 


121 


86.4 


78 


84.8 


Total, Other States 


27 


19.0 


19 


13.6 


14 


15.2, 



Source: Census of Manufactures , 1929 , 1931. and 1933 . "Motion Pictures, not 
Including Projection in Theatres." 

Number of Members and Size of Concerns 

The members of the production division of the Industry fall into two 
groups. There are eight large companies which produce approximately 80 per 
cent of the total value of production as valued on a cost-of-production 
basis and approximately 65 per cent by number of features produced. 1/ Pive 
of the major companies supply nearly 100 per cent of the newsreels produced, 

The remaining pictures are produced by approximately 30 independent com- 
panies having sufficient importance to have the names of their production 
staffs listed in the Motion Picture Almanac . Most of these minor producing 
firms contribute their portion of the product under a "unit" system which 
fits into and becomes a part of the production schedules of the major pro- 
ducers. In addition to the above, there are many other small producers who 
make one or two motion pictures intermittently over a period of years. 

Cross and Net Income 

Table IV shows the gross income and the net profit or loss of motion 
picture producers from 1927 through 1932. In 1930 gross income increased al- 
most 70 million dollars over the 1929 level of $343,445,000 and the producers 
reported a profit of more than $40,000,000 annually in each of these years. 
Although in 1931 gross income was almost 100 million dollars greater than in 
1929, there was a net loss of $8,674,000. In 1932 gross income fell to less 
than one-half the 1931 level and the producers suffered a net loss of over 
$30,000,000. - 



1/ Motion Picture Producers and Distributors of America 



■Hi 



-8- 



The decrease in the profitability of the Industry has "been attributed 
to a number of factors, including over-expansion in the direction of seating 
capacity, erection of theatres at an excessive cost per seat, mismanagement 
within the Industry, payment of inordinately large compensation for services, 
and the effect of the depression upon the demand for entertainment. 

TABLE IV 

Gross Income and Net Profit or Loss, 1927-1932 
(in thousands) 



Year 


Gross Income 


Net Profit or Loss 


1927 


$239,426 


$8,032 


1928 


230,266 


17,109 


1929 


343,445 


44,400 


1930 


410,700 


40,282 


1931 


441,948 


-8,674 


1932 


190,795 


-30,199 



Source: Bureau of Internal Revenue, Statistics of Income , 



Net Income by Major Companies 



Table V shows the consolidated net income of six major companies for 
1932, 1933, and 1934. Attention is directed to the recovery made by the 
three companies, namely, Pox, Warner, and Paramount, which had the largest 
net bases in 1932. The totals show that the group loss of $36,519,000 in 
1932 had by 1934 been turned into a net income of $14,371,000. 



TABLE V 

Consolidated Net Income or Loss for Six Major Motion Picture 

Companies, 1932-1934 
(in thousands) 



Company 1932 1933 1934 

Group Total -$36,519 $4,568 $14,371 

Columbia Pictures Corporation 574 740 1,009 

Pox film Corporation - 16,151 1,411 3,000 a/ 

Loetr' s Incorporated 7,961 4,034 7,480 

Warner Brothers Pictures, Inc. - 14,095 -6,292 -2,530 

Universal Pictures - 1,250 -1,017 - 500 a/ 

Paramount-Publi.c Corporation - 13,558 5,692 a/ 5,912 a/ 



Source: Standard Statistics Company, Standard Trade and Securities . 

"Theatres and Motion Pictures, « Vol. 75, No. 22 (Pehruary 20, 1935). 

a/ Estimated. 



8976 



J 







~9~ 

Total Cost of Production 

The production of motion picture films is not a manufacturing activity 
in the sense in which the term is generally used to designate the factory 
production of commodities. Furthermore, since the Motion Picture Industry 
does not usually sell, "but leases or rents its product, it is impossible to 
determine the actual value of the output of a given year until a long time 
after its close. It is therefore necessary to substitute "cost of produc- 
tion" for "value of product" in presenting data for this Industry. 

An examination of Table VI indicates that the cost of production increased 
each year from 1921, until it reached a peak of $184,102,000 in 1929 when 
the introduction of equipment for sound production caused a large increase in 
cost of production. In 1931, the Industry's decreased production costs can 
probably be attributed in part to better adjustment to the innovation of 
sound, but the impact of the depression was probably beginning to be felt. 

TABLE VI 



Total Cost of Production, for Census Years, 1921-1933 

(In thousands) 



Year 


Cost of 


Per Cent Change 




Production 


from Preceding Year 


1921 


$77,397 




1923 


86,418 


+ 11.7 


1925 


93,636 


+ 8.4 


1927 


134,343 


•i- 43c 5 


1929 


184,102 


+ 37.0 


1931 


154,436 


- 16.1 


1933 


119,343 


- 22.7 



Source: Census of Manufactures . 1929 and 1933 . "Motion 
Pictures, not Including Projection in Theatres." 

Volume of Production 

Total Domestic and Foreign Releases . - Table VII shows the total number 
of features released in the United States for the years 1927 to 1934. Data 
are presented to show how many of the total releases were foreign features and 
how many were made by American producers. During the years 1932, 1933, and 
1934, the proportion of foreign pictures releases was greater than in most of 
the prior years. In 1934 the number of foreign features shown in this country 
amounted to 27.5 per cent of the total. 



8976 



-10- 



TABLE VII 

Number of Domestic and Foreign Motion Picture Features Released 
In the United States, 1927-1934 



Total Domestic Features Foreign Features 



Number Per Cent Number Per Cent Number Per Cent 

of Total ■ of Total of Total 



1927 743 100,0 668 89.9 75 10.1 

1929 820 100.0 627 76.5 193 23.5 

1929 850 100.0 705 82.9 145 17.1 

1930 600 100.0 514 85.7 86 14.3 

1931 627 100.0 505 80,5 122 19.5 

1932 685 100.0 489 71 c 4 196 28.6 

1933 644 100.0 507 78.7 137 2l c 3 

1934 662 100.0 480 72.5 182 27.5 



Source: Film Daily Yea rbook of Motion P ictu res, 1935. 

I-Todaction of "Feat u res." - Table VIII shows the number of features 
produced from 1927 through 1934. Attention is directed to the high number 
of releases by major companies in 1927 and the gradual decline through 1932, 
with the subsequent moderate rise. During these years the major companies 
averaged almost 70 per cent of the total number of feature pictures released. 

TABLE VIII 

Features Released by Major and Independent Domestic 

Companies a/ 



Kind of Company 



Total Major Independent 

iamber Fer~CehT ^mber Per Cent lumber Per Uent 
of Total of Total of Total 



1927 668 lOOcO 510 76 3 158 23.7 

1928 627 100.0 462 73„7 165 26.3 

1929 705 100.0 393 55 „ 7 312 44.3 

1930 514 100.0 352 70 o 4 152 29.6 

1931 505 100.0 324 64.1 181 35.9 

1932 489 100.0 318 65.0 171 35.0 

1933 507 100.0 338 66.7 169 33.3 

1934 480 100.0 361 75.2 119 24.8 



Source: F ilm Daily Yearbook of Motion Pictures . 1935. 

a/ During 1927-1931, ten companies listed; during 1932-1934, eight 
companies listed. 



8976 



-11- 



Production of "Shorts." - Table IX shows the estimated number of 
"Short Subjects," of one or two-reel length, produced for the years 1930- 
1931 through 1934-1935. The table does not include newsreels produced 
annually by each of the five major companies, or approximately 20 reels. 

TABLE IX 



Total llumber of Shorts Produced, 
1930-1931 to 1934-1935 



Season 


Number 


1930-1931 


1,286 


1931-1932 


1,372 


1932-1933 


1,297 


1933-1934 


1,062 a/ 


1934-1935 


956 a/ 



Source: Compiled from data in the Motion 
Picture Almanac. 



a/ Estimated on basis of announced 
plans of companies. 

"Box-Office Rating" of Producers 

The relative quality and importance of the production of the eight 
major producers may be ascertained from an examination of Table X, which 
shows the estimated "box-office strength" of feature pictures produced by 
the major producers in comparison with the feature pictures produced by the 
independent producers. 

Each feature release is assigned a weight, according to indicated box- 
office potency, and a weighted average for the entire year is then computed, 
A perfect score of 1,000 would result only if every film of a producer were 
given a "Hit" rating. 

It will be seen from the table that United Artists and Loew 1 s (HGM) re- 
ceived the highest box-office ratings in both 1933 and 1934. In 1934 they 
received 762 and 552 respectively. In the same year, independent companies 
received an average rating of 164. 



8976 



-12- 



TABLE X 



Estimate of Box Office Strength of feature Pictures, 
for Each of Eight Major Companies and All Independents, 

1933 and 1934 



Company- 


1933 


1934 


United Artists 


583 


762 


Loexr' s IMGMJ 


582 


C C 

552 


TTarner Brothers 


486 


429 


H.Z.O. 


395 


433 


Paramount 


380 


508 


Pox Film 


368 


446 


Universal 


362 


366 


Columhia 


260 


302 


Average 


424 


453 


Independents 


175 


164 



Source: Standard Statistics Company, Standard Trade and 
Securities , "Theatre and Motion Pictures," Vol. 
75, No. 22 (February 20, 1935) p. TH-48. 



-13- 



PAP.T II: PRODUCTION 

Chapter II. Labor Statistics 

Total Number of E irol oyee s 

Table XI shows the average annual number of employees, in the produc- 
tion division as reported by the Census of Manuf actures,. The Ho t i o n P i c tar e 
Almanac has estimated the total employment as 30,000 in 1933, compared with 
the Census figure of 19.037 for the same year. 

TABLE XI 

Average Annual Number of Salaried Employees and of 

Wage Earners 



1929 1931 1933 

Salaried Employees 8,818 — 8,260 

Wage Earners 10,784 — 10,777 

Total 19,602 14,839 a/ 19,037 

Source: Ce nsus of Manuf actures , 1933 , "Motion Pictures, Hot 
Including Projection in Theatres." 

a/ Figures for 1931 are incomplete and not comparable 
with figures for other years. 

Ilumber of "Extras " 

There are no accurate data as to the total number of "extras" employed 
in the Industry. Mr. Allen Garcia-, representing extras, stated at the 
hearing on the proposed Code that the total number of this type of employee 
registered and available has been variously estimated as between 8,000 and 
14,000 annually* 1/ 

In addition, complete data are not available as to the total number 
of placements of extras, but Table XII shows the number of such placements 
made by the Central Casting Corporation, the leading employment agency for 
obtaining jobs for this t"/pe of employee. The number reported by this 
agency is considered to represent a great majority of the total number of 
placements. 



1/ Transcript of NBA Hearing, Motion Picture Industry, September 12, 1933. 



8976 



-14- 



TABLE XII 

Number of Placements and Wages 
of "Extras" Registered with the 
Central Casting Corporation 
1926-1934 



Placements Wages 



iear 












Total Number 


Average Daily 


Total Annual 


Average Wage 






Number a/ 


(000 ! s) 


per Placement 




259,259 


710 


$2,195 


$8.46 


1927 


330,397 


905 


2,838 


8.59 


1928 


276,155 


758 


2,470 


8.94 




262,958 


840 


2,401 


9.13 


1930 


252,446 


807 


2,460 


9.74 


1931 b/ 


177,523 


621 


1,658 


9.34 


1932 cj 


176,785 


677 


1,545 


8.74 


1933 


251,914 


805 


2,049 


8.14 




219,857 


705 


1,985 


9.03 


Source: 


Motion Picture Almanac, "Animal 


Report of the Central Casting 




Corporation. " 










To tad number 


of placements divided by total number of days, 




exclusive of 


Sundays. 








Data for 1931 


are for the first 


eleven months of 


the year. 


0/ 


Data for 1932 


are for the first 


ten months of the 


year. 



Seasonal Variation in Employment 

Data, on seasonal variation of employment in the production division 
of the Industry, which are presented for the years 1929 and 1933 in Table 
XIII, show relatively low employment in the first four months of each yea.r. 
Production for the summer selling season begins around May, and producers 
usually attempt to start work on special features at that time in order 
to further their sales efforts. In 1929 and 1933 employment was higher in 
the last six months of the year, with maximum employment occurring in 
September. 

Table XIII also shows that during the last four months of 1933, enploy- 
ment was generally about 15 per cent higher than in 1929. This increase 
may be partially attributed to a decrease in hours and subsequent increase 
in the number of wage earners under the "President's Re-employment Agreement. 



8976 



-15- 



TABLE XIII 





Number of Wage 


Earners, by Month 


s, 1929 and 


1933 






J. U Cj tJ 


1933 




Month 














Index 




Index 




Number 


(Annual av- 


Number 


(Annual av- 






erage=100) 




er age= 100 ) 


J anuary 


9,929 


92 


9, 592 


89 


February 


9, 694 


30 


9, 567 


89 


Ms.rch 


9,113 


84 


8, 592 


80 


April 


9, 560 


89 


8, 547 


79 


May 


10, 722 


99 


7, 880 


73 


June 


10,805 


100 


9,212 


85 


July 


11,422 


106 


10,491 


97 


August 


11,616 


108 


11,821 


110 


September 


11,938 


111 


13,734 


127 


October 


11, 506 


107 


n r-7 /Tin 

13, 627 


12b 


November 


11,690 


108 


13,310 


124 


December 


11,407 


106 


12,947 


120 


Average 


10,784 


100 


10,777 


100 



Source: Census of Manufactures , 1929 and 1933 , "Motion Pictures, 
not Including Projection in Theatres." 

Total Annual Wages 

Table XIV shows the total salaries and wages paid in 1929 and 1933 
as reported by the Census of Manufactures. Comparison of the years 1929 
and 1933 indicates that the reported total compensation decreased from 
$85,028,000 to $71,343,000, or 16 per cent, salaries decreased approximate- 
ly 12 per cent, and wages dropped about 26 per cent. The decline in total 
salaries was accompanied by a somewhat smaller decrease in the number of 
salaried employees, but since the 26 per cent decline in total wages was 
accompanied by practically no change in the number of wage earners, there 
must have occurred marked cuts in wage rates and/or a considerable substi- 
tution of part-time for full-time workers. (See Table XI, above.) 

It may also be seen from Table XI? that salaried employees enjoyed 
a larger proportion of the total compensation in 1933 than in 1929. Salaries 
represented approximately 71 per cent of the total compensation in 1929 and 
about 74 per cent in 1933, while wages as a percentage of total compensation 
decreased from about 29 per cent to approximately 26 per cent. 



8976 



-16- 



TABLE 


XIV 


Total Annual Salaries 


and TTages, 1929 and 1933 


1929 


1933 Per Cent 


Kind , . _ _ . 
„ _ , . Amount Per Cent 
oi Conroensation / „ . \ 

1 (000 : s) of Total 


Amount Per Cent igggfigSS 
(000 5 s) of Total 


Total $85,328 100,0 


$71,343 100.0 - 16.1 


Salaries 60,163 70,8 
Wages - 24,860 ^9.2 


52,948 74.2 - 12.0 
18,395 25o8 - 2b. 


Source: Census of Manufactures, 1933 


, ]] Mot ion Pictures, not Including 


Projection in Theatres." 




Annual Wages "by Principal States 




Ta"ble XV" shows the annual wages paid in 1929 and 1933 in the three 
principal producing sta.tes. California accounted for 79 per cent of the 
total in 1929 and 64 per cent in 1933. Hen York declined in importance 
from 1929 to 1933, for it accounted for 15 per cent of the total in 1929 
"but only 11,5 per cent in 1933. 


TABLE 


XV 


Annual Wages,, "by Three Principal States, 
1929 and 1933 


1929 


1933 


State Wages 

(000' s) 


Per Cent Wages Per Cent 
of Total (000' s) of Total 


U. S. Total $24,860 


100.0 $18,395 100.0 


California 19,584 
New York 3,649 
Illinois 216 


78.8 15,460 84.0 
14.7 2,111 11.5 
.9 185 1.0 


Total, 3 States 23,449 
Total, Other States 1,411 


94.4 17,756 96.5 
5.6 639 3.5 


Source: Census of Manufactures, 1929 


and 1933, "Motion Pictures, 


Not Including Projection in 


Theatres." 


Salaries and 7ages as a Per Cent of Cost of Production 


Table XVI shows the per cent of 


total cost of production spent for 



wages in 1929 and 1933. The 1929 wage cost of $24,860,000 dropped to 
$18,395,000 in 1933, but as a per cent of total cost of production, it 



8976 



-17- 



increased fron 13.5 per cent in 1929 to 15.4 per cent in 1933, or a gain 
of 14 per cent. While the annual salaries paid in 1929 decreased from 
$60,168,000 to $52,948,000, the -per cent of total cost of production which 
these figures represent rose from 32.7 per cent in 1929 to 44.4 per cent 
in 1933 or a gain of 36 per cent, 

TABLE XVI 

Total Cost of Production, Annual Salaries and Annual Wages 

1929 and 1933 



Year Total Cost of Total Salaries and Salaries Wage; 

Production Wages 



(000's) Amount Per Cent of Amount Per Cent Amount Per Cent o? 

Total Cost (000' s) of Total (000's) Total Cosi 

Cost 

1929 $184,102 $85,028 46.2 $60,168 32.7 $24,860 13.5 

1933 119,343 71,343 59.8 52,948 44.4 18,395 15.4 



Source: Census of Manufactur e s, 1933 , "Motion Pictures, Hot Including 
Projection in Theatres' 1 . 



Wages of Extras 

Table XII above indicates the average wage per extras placed "by the 
Central Casting Corporation. These figures were derived "by dividing the 
total annual wages by the total number of placements. It must be understood 
that the average \7age per placement as shown does not represent the average 
wage of all registered extras, but merely of those placed by this particular 
agency. 

Table XVII indicates the reduction between 1930 and 1933 in the number 
of extras, as placed by the Central Casting Corporation who received high 
daily wage rates. In the former year three-fourths of the placements re- 
ported in the table received $10.00 per day while in 1933 only one- third were 
placed at this rate. The number receiving daily wages of $5.00 increased 
from 24 per cent to 40 per cent while the number in the $3.00 wage class in-» 
creased from .1 of one per cent in 1930 to 27 per cent in 1933. 



8976 



-18- 



TABLE Mil 



Distribution 


of Placements 


of Extras by 


the Central Casting Corporation 


at 


Specified Daily Wage Hates 


, 1930 and 1933 a/ 






1930 




1933 




Daily Wage 


Number 


Per Cent 


Humber b/ 


Per Cent 


Rate 




of Total 


of Total 


Total 


143,209 


100.0 


126,934 


100.0 


$3.00 


206 


.1 


34, 386 


27,0 


5.00 


34,075 


23.8 


51,102 


40.3 


10.00 


109,128 


76.1 


41,446 


32.7 



Source: Transcript of ERA Hearing, Motion Picture Industry, September 12, 1933 

a/ The number of placements does not represent the total number of 

extras placed, but covers only those placements made at the wage 
rates shown. 

b/ Estimated by prorating the placements for the first half of 1933. 

Average Hourly Wage Hate 

There are no accurate average figures available which represent the 
composite hourly wage rate for all classes of wage earners in the production 
division of the Industry/ - . The minimum hourly wage rate specified in the Code 
for all classes of employees was 40 cents. The range in minimum rates for 
various classes of studio mechanics and laboratory workers was from 60 cents 
to $2,25 per hour. Reports of the Research and Planning Division of KRA 
and from the Division Administrator's Office have indicated that the Code 
rates represented an estimated increase of approximately 15 per cent over the 
1929 rates. It is believed that the increases applied main^ in the lov/er 
wage brackets, where labor is largely unorganized. 

Average Hours Worked per Week 

Table XVIII gives the prevailing hours of labor per week in the pro- 
duction division of the Industry for the year 1929. More than 60 per cent 
of the total number of establishments worked their employees "between 45 and 
48 hours per week. The total number of wage earners in this group amounted 
to 86 per cent of the total number of wage earners. Only ,1 of one per cent 
of the wage earners worked 48 hours or more per week. 



8976 



-19- 



TABLE XVIII 

Number of Establishments and lumber of Wage Earners, 
Classified by Number of Pull-Time Hours Worked 
per Week, 1929 



lumber of Hours 
per Week 



Total 

40 hours or less 
40 - 45 hours 
45 - 48 hours 
48 hours or more 



Es tablishments 
Per Cent 
Number of Total 



135 

5 
41 
82 

7 



100.0 

3.7 

30.4 
60.7 
5.2 



Wage Earners 



Number 



10,742 

100 
1,357 
9,278 
7 



Per Cent 
of Total 



100.0 

.9 

12.6 
86.4 
.1 



Source: Comoiled from Ce nsus of Ma nufactu res, 1 929, Vol. I, Table VI , 

"Motion Pictures, not Including Projection in Theatres". 



Child Labor 

Child labor is not an important problem in the Industry. In 1930, 
2,213 helpers in motion picture production were reported by the occupation 
statistics of the Census of Population, but only 93 of these helpers were 
between the ages of 10 and 17 years. It must be borne in mind that these 
data refer not to the number actually employed, but rather to the number 
reporting themselves as belonging, by occupation, to this Industry. 

Employees by principal States 

Total Employees . - Table XIX shows the average annual number of salaried 

employees and wage earners by three principal states for 1929 and 1933. There 

was an increase in California from 77,4 per cent of the total in 1929 to 85,2 

per cent in 1933, a gain of 11 per cent, New York showed a large decrease, 

from 14.5 per cent of the total to 9,2 per cent, or a loss of 36 per cent. 

These two states alone employed over 90 per cent of the workers in each of 
these years, 

TABLE XIX 

Average Annual Number of Employees, by Three Principal 

States, 192 9 and 1 933 a/ 

1929 1933 

State Number Per Cent Number Per Cent 

of Total of Total 



U. S. Total 


19,602 


100.0 


19,037 


100.0 


California 


15,167 


77.4 


16,417 


86.2 


New York 


2,850 


14.5 


1,748 


9.2 


Illinois 


202 


1.0 


162 


.9 


Total, 3 States 


18,219 


92.9 


19,037 


96.3 


Total, Other States 


1,383 


7.1 


710 


3.7 



Source: Census of Manufactures , 1929 and 1933 , "motion Pictures, 

not Including Projection in Theatres". 
qq^Jq Includes wage 'earners and salaried employees. 



-20- 



Wage Earners. - Ta"ble XX shows wage earners, by principal states, 
for 1929 and 1933. In 1929 California accounted for 74.6 per cent of total 
wage earners; in 1933, 83,7 per cent, representing a gain of 12 per cent. 
New York again showed a large decline from 15.7 per cent of the total to 
10.7 per cent, or a loss of about one-third. These two states alone employ 
ed more than 90 per cent of the wage earners in 1929 and 1933. 



TABLE XX 



Average Annual lumber of Wage Earners, by Three 
Principal States, 1929 and 1933 





1 QPQ 


1933 




State Number of 


Per Cent 


Number of 


Per Cent 


Wage Earners 


of Total 


Wage Earners 


of Total 


U. S. Total 10,784 


100.0 


10,777 


100.0 


California 8,052 


74.6 


9,022 


83.7 


New York 1,695 


15.7 


1,149 


10.7 


Illinois 82 


•8 


108 


1.0 


Total, 3 States 9,839 


91.1 


10,279 


95.4 


Total Other States 955 


8.9 


498 


4.6 


Source: Census of Manufactures, 


1929 and 1933, 


"Motion Pictures, 


not Including Projection 


in Theatres." 







8976 



-21- 



PABT II: PIOHJCTIOI 
Chapter III. Materials 



Cost of principal Materials Used 

The principal material used in the production division of the 
Industry is raw film, purchased from the Eastman Kodak Company, the 
Dupont Film Manufacturing Corporation and from a few foreign countries, 
principally Germany, France, and. England. 

Table XXI shows the total cost of materials, fuel, and purchased 
electric energy used "by the production division of the Industry in 1929, 
1931, and 1933. This cost averaged about 21 per cent of the total cost 
of production in each of the years shown. 



TABLE XXI 



Total Cost of production and Cost of Materials, 
Fuel, and Purchased Electric Energy 



Cost of Materials, Fuel, 

Total Cost of and Purchased Electric Energy 
Year Production Amount Per Cent of 

(OOOi s) (000' s) Total Cost 

1929 $184,102 $38,441 20.9 

1931 154,436 32,222 20.9 

1933 119,343 25,153 21.9 



Source; Census of Manufactures, 1933 , "Motion Pictures, not Including 
Projection in Theatres," 

a/ Materials consist of miscellaneous studio supplies and 
containers for films. 

Source of Equipment and Supplies 

Table XXII shows the number of establishments producing photographic 
apparatus and supplies by states for 1929, 1931, and 1933. It must be 
understood that these data pertain to the entire production of such material 
and not just to that used by the Motion picture Industry. 



8976 



~22~ 



TABLE XXII 

Number of Establishments Producing Photographic 
Apparatus and Supplies, "by Principal States 



States 1929 1931 1933 



U. S. Total 


115 


110 


84 


California 


11 


8 


5 


Illinois 


21 


24 


17 


Indiana 


3 


4 


o 


Massachusetts 


4 


3 


a/ 


I.Iichigan 


3 


2 


3 


Minnesota 


4 


3 


ay 


Missouri 


8 


7 


5 


Hew York 


35 


32 


ay 


Ohio 


5 


3 


3 


Pennsylvania 


14 


14 


7 


Total, 10 States 


108 


100 


43 


Total, Other States 


7 


10 


41 



Source: Census of Manufactures , 1929 , 1931 , and 1933 , "Photographic 
Apparatus and Supplies." Census data do not include estate 
lishments having an annual production of less than $5,000, 

a/ Hot reported separately in 1933. 



8976 



PART II: PRODUCTION 
Chapter IV. Unfair Trade Practices 



Enticenent of Talent and Activities o f Agents 

The problem of salaries of stars and the activities of agents are the 
only two significant trade practice problems which may be clearly allocated 
to the production division of the Industry. 

This division centers about a relatively small group of personalities 
— such as actors, directors, writers, and technicians — who have become 
known through advertising, publicity, and other methods. The removal of a 
personality often seriously disrupted production until a suitable replace- 
ment could be found or developed. 

Hew companies usually found it more profitable to employ talent 
already developed and secured such individuals by offers of higher salaries, 
Long-term contracts did not solve the problem of "star-raiding, " because 
competing exhibitors, desirous of acquiring the services of such talent, 
induced the breaking of existing contracts. Moreover, offers of higher 
salaries from competitors unquestionably produced psychological effects 
which tended to decrease the quality of the stars' work and in extreme 
cases rendered them worthless. Complete contentment necessary for quality 
work was usually reestablished only when the employer equalled the com- 
petitive offer which, in some cases was not definite enough properly to 
be called an offer. 



8976 



■ i 



~ 24 ~ 



PART II: PRODUCTION 
Chapter 7. General Information 

imports 

(Table XXIII shows the exports of total linear feet of film for the 
years 1929 through 1934, 2Jo figures are available on the value of such 
films other than the declared value, which is based largely on quantity 
rather than on exhibition value. 

TABLE XXIII 

Exports of Motion Pictoe films, 1929-1934 aj 
( In thousands ) 



Year Total Linear Feet 



1929 282,216 

1930 274,251 

1931 199,690 

1932 160,773 

1933 164,537 

1934 194,434 



Source: hot ion Picture Almanac ; as prepared by the Bureau of Foreign 
and Domestic Commerce. 

a/ Includes negative and positive sound and silent films. 
Advertising 

The Motion Picture Almanac has estimated that the Industry as a 
whole spends $70,000,000 annually for advertising in newspaper, magazines, 
billboards, radio, and other media. No figures are available relative to 
the amount spent by the producers. 

Productive Capacity 

Hb adequate measures of the productive capacity of the Industry 
exist. Production schedules are determined largely by the demand from 
the exhibition division. 

Trade Associations 

Motion Picture Producers and Distributors of America, Inc. (MPPDA ). - 
This organization, of which Will H. Hays is President, was formed in 1922. 
It is composed of more than twenty companies, including the so-called 
"Big 8" producers and distributors. It furnishes information on all Industry 

8976 



- 25 - 



matters and serves as a coordinating agency in industrial relationships 
and functions as interpreter of problems and policies of public interest. 
It also represents the Industry in connection with all sorts of "anti" 
legislative measures which are a constantly recurring plague to the Indus- 
try. Its members find it an economical means of gathering useful infor- 
mation, and of securing necessary services and facilities. 

The Academy of Hot ion P icture Arts and Sciences. . - This organization 
which is a guild-like association of the production "branch of the Industry* 
was organized in 192? to deal with production problems. The Academy is 
controlled and financed by the producers. It has provided methods of 
adjustment and reconciliation among producers as well as between producers 
and their various classes of employees. It has attempted to "bring about 
industry-wide technical coordination by educational campaign's designed to 
reach all concerned therein, and has served as a clearing house for the 
collection of technical data in production. Its public-relations efforts 
have been focused towards contacting surve3^ experts, special organizations, 
and manufacturing and research concerns, rather than the press and the 
public. 

Trade Union Activity 

The Actor's Equity Association which is chartered by the Associated 
Actors and Artists of America and affiliated with the American federation 
of Labor has jurisdiction in the motion picture field. Its offices are 
located in Hew York, Chicago and Hollywood. In 1933, the Association had 
1,418 memhers. These consist of both actors and actresses who had received 
screen credit (i.e. listing in cast of pictures) or professional recognition. 



8976 



-26- 



PART III: DISTRIBUTION 

Chapter I. The Nature of the Division 

History and Scoioe of Division 

Origin of Film Exchange. - Daring the Industry's formative stages, films 
were purchased outright fron producers and exhibited until worn out or until 
they ceased to he profitahle. This system later gave way to a more efficient 
and economical method of distribution known as the film exchange, which was 
introduced in IS 02 "by Harry J. Miles of San Francisco. This system originated 
in the functions of maintaining film stocks, which requires the supervising 
and physical transportation of film, and the inspection and repair of damaged 
film. The film exchange is in essence a licensing system whereby the films 
remain the property of the exchange, and the exhibitor merely obtains a license 
to show a particular film in a designated theatre for a stip.ula.ted period of 
time, at a charge equal to about half the purchase price. 

Developments in Film Distribution. - In the early stages, positive films 
were sold by length on a flat footage basis regardless of the individual pic- 
ture, actor, or director. No consideration was given to the number of picture; 
leased, character and size of theatre, and the population of the town or city. 
There were no distinctions made between first or subsequent runs. 

The distributors developed what was known as the "program system," supply? 
ing the exhibitor with a constant flow of two or three-real pictures, two or 
three time per week, The public appreciation for better-quality films gave 
rise to the "star" system, and demands for longer programs featuring such star 
Pickford, Hart, and Sermett • The exploitation of stars and concomitant effort 
to attain quality by purchases of expensive scenarios and production extrava— 
ganda brought on the full-length feature, absorbing the greater part of the 
entertainment program. Rising production costs led to an upward revision of 
leasing charges and eventually to the general adoption of a policy of block 
booking by the distributors, 

Another development was the construction of theatres exclusively for the 
showing of motion pictures, displacing arcades, shooting galleries, and empty 
stores as well as legitimate and vaudeville theatres. 

With the development of the "star" and the "feature" system which gave th 
pictures individuality, and the construction of theatres exclusively for motio: 
pictures which resulted in more efficient and economical presentation, distri- 
butors began to vary the prices of pictures according to their estimated value 
Pictures were no longer sold at random on a flat footage basis. Wider geo- 
graphical distribution came to be considered necessary since it was found that 
first showings usually exhausted considerable exhibition value of a -picture 
in localized areas. Thus nation-wide facilities for merchandising, rehandlin§ 
and servicing a product, which varied in price and quality, became necessary. 

National and "State Right" Distribution. - The first effort to attain 
effective national distribution was made by the formation in 1910 of the Gener» 
al Film Company, controlled by the liotion Picture Patents Company. Independent 
producers, who were not permitted to use these facilities, distributed chiefly 
through independent distributors. These distributors, who were scattered 



8976 



throughout the country, operated on a "state right" basis. The state right ex- 
changes "bought films outright or more comripnly leased films with the exclusive 
right of redistributing then to exhibitors within certain geographical areas. 

host state right distributors were also exhibitors whose original purposes 
were to obtain films for their own theatres, their interest in complete distri- 
bution being often less than casual, Moreover, since no producer could supply 
sufficient product to furnish the entire requirements of the average exhibitor, 
state right distributors were naturally interested in obtaining films from more 
than one producer, and this diversity of interest usually resulted in mediocre 
sales, service and maintenance efforts from the point of view of the producers. 
Aggressive selling efforts necessary for intensive distribution were lacking* 
Rentals received from films were not believed to be commensurate with their 
earning power. The producer, on the other hand, could not set prices for the 
distributors 1 subleasing of film but received what the latter would pay for it. 
He usually found out a picture's value in a given territory after it was too . 
late to capitalize on it. 

Producers as Film Distributors . - Unlike conditions in the manufacturing 
industries, the cost of the production of a motion picture has usually little 
direct relation to its sales value* Consequently the producer soon realized 
the great importance of obtaining proper control of distribution. Integration 
with production was inevitable since producers were placed in the position of 
having the value of their product determined to a large extent by distributors. 
Consequently, producers with sufficient financial resources generally pursued 
the policy of obtaining control of distribution. 

Present-Day Film Distribution . - The actual process of distribution in- 
volves the licensing of the exhibitor to show copy— righted film, assigning play- 
ing dates, physical distribution of films to theatres, and the collection of 
accounts. Advertising material for the pictures to be shown is usually sold in 
conjunction with the licensing of films. Exchanges are located in key cities 
throughout the United States. The 50 to 250 positive prints made from the ex- 
posed negative are distributed to first-run, second-run, and subsequent-run 
theatres in proper order and point of time according to contractual specifica- 
tions*- Rental variations extend from as low as $5 per day to several thousand 
dollars per week, while percentage agreements may call for 10 per cent to 50 
per cent of the box office receipts. Combinations of both forms are not un- 
common. Another arrangement sometimes used allows the exhibitor a svn to de- 
fray current operating expenses and the surplus is then split according to 
agreement. The rental charge is governed primarily by the exhibitor's ability 
to pay, which, in turn, depends upon a variety of factors, chief among which is 
the estimated box-office receipts, based upon previous experiences with the 
star and cast in some comparable vehicle. Other factors are seating capacity, 
number of performances per day, price of admission, character of accompanying 
presentation, prestige of the theatre, and efforts made for exploitation. 

All the "major" companies maintain distributing establishments in "key" 
centers throughout the United States. Small independent producers often dis- 
tribute their films through the facilities of the large producer-distributors, 

Total Humber of Exchange Establishments 

The total number of exchange establishments in 1929 was reported by the 
Census as 533. (See Table XXIV, Below). 
8976 



-28- 



Number of Exchange Establishments by Principal Sto.tes 

Table XZCV shows the distribution of the 533 exchanges by six principal 
states in 1929, Hew York accounted for almost 16 per cent of the total number, 
California .and Pennsylvania each had more than 6 per cent. Ohio, Massachusetts 
and Illinois follow in the order mentioned, each having about 4 per cent of the 
to tod number of exchanges within their borders. The six states accounted for 
42 per cent of the total number for the country. 

TABLE ZHV 

Iluaber of Exchanges and Volume of Business Handled, by 
Six Principal States, 1929 



Exchange s Volume of Business 

State lumber Per Cent Amount Per Cent 

of Total (OOO's) of Total 



U. S. Total 


533 


100.0 


$220,605 


100.0 


California 


36 


6.8 


16,057 


7.3 


Illinois 


21 


o • 9 


14,952 


6.8 


Massachusetts 


23 


4.3 


13,283 


6.0 


New York 


85 a/ 


15.9 


51,581 


25.4 


Ohio 


25 


4.9 


13,326 


6.0 


Pennsylvania 


34 


6.4 


25,097 


11.4 


Total, 6 states 


225 


42.2 


134,306 


50.9 


Total, Other States 


308 


57.8 


85,299 


39*1 



Source: Census of Distribution, 1929 "Motion Picture Films" (Trade Series, 
Distribution No. 7-201). 

a/ Includes 14 export exchanges. 

Volume of Business b" Principal States 

Table EXIV, obove also shows the volume of business done by these six 
principal states in 1929. New York, which had the largest number of exchanges 
accounted for more than 23 per cent of the total exchange business (including 
exports by the 14 New York City exchanges which engaged in export business 
exclusively.) Pennsylvania was the second most important state in 1929, .ac- 
counting for aboiit 11 per cent of the total business; California accounted for 
7 per cent of the business; and Illinois, Massachusetts, and Ohio, averaged a 
little more then 6 per cent each. 

It is noteworthy that these six states containing less than 38 per cent 
of total population of United States accounted for more than 60 per cent of th< 
total volume" of the motion picture distributing business. 



8976 



-29- 



Number of Establi shments b:-- Type of Exchange 

TTith the development of large chain theatres, the vertical integration of 
producers with theatre chains, and the growing financial strength of producing 
companies, the independent distributor has "become less significant. Producers 
now either associate with existing distributors or more often establish their 
own distinct exchanges. In 1929, according to Table XXV, producers exchanges 
totalled 444 in number or 83 per cent of the total. Next in irrportarce to the 
exchanges owned "by producers were the independent" exchanges, comprising 14 per 
cent of the total. The export exchanges numbered 14, or less than 3 per cent 
of the aggregate, and 4 of these were owned by producers* 

TABLE XXV 

Number of Exchanges, and Number of Employees, by 
Principal Types of Exchanges, 1929 



Type of Exchange 

Item Total Producer Independent Export 

Number Per Cent Number Per Cent Total' Per Cent Total Per Cent 
of Total of Total Amount of Total .Amount of Total 



Number of 

Exchanges. 533 100.0 444 83.3 75 14.1 14 2.6 
Number of 

Srroloyees 9342 100.0 8797 94.2 393 4.2 152 1.6 



Source: C ensus of Distribution, 1929 , "Motion Picture Films" (Trade Series, 
Distribution No. H7-201.) 

Volume of Business "D'~ Tyoe of Exchange 

Table XXVI shows that in 1929 the producers exchanges did most of the 
business, for they accounted for 95 pei cent of the total. Furthermore, the 
4 export exchanges owned by the latter contributed an additional $5,318,000 
worth of business or almost 2.5 per cent of the total volume. 

Next in importance to the exchanges owned by producers were the export 
exchanges which carried on a business amounting to 3 ;oer cent, 2 2 j per cent of 
which, as mentioned above, was done by the 4 exchanges owned by the producers. 
The independents accounted for only about 2 per cent of the total. 



8976 



-30- 



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-31- 

PART III; DISTRIBUTION 

Chapter II. Labor Statistics 

Average Annual Number of Employees 

Census data as presented in Table XXVII place trie average annual em- 
ployment of all exchanges at 9,342 in 1929. Of these, about 20 per cent 
were executives or salesmen. 

Total Number of Employees by Types of Exchanges 

As shorn, in Table XXV, above, producers' exchanges reported 8,797, 
or 94 per cent of the total number of employees. Independent exchanges 
employed 4 per cent, and the export group accounted for less than 2 per 
cent of the total. 

Average Annual Payrolls 

According to Table XXVII, the average annual payroll covering all 
employees was $17,978,000 in 1929, Executives, who constituted less than 
4 per cent of total employees, received almost 14 per cent, while the 
salesmen, amounting to 17 per cent of the total number, received 35 per cent 
of the total payroll. The remaining employees, who constituted almost 80 
per cent of the total employees, received 51 per cent of the total payroll. 

TABLE XXVII 



Average Annual Number of Employees and Average Annual 
Payrolls, 1929 



Kind of 
Employee 


Employees 


payrolls 


Number 


Per Cent 
of Total 


Amount 
(000» s) 


Per Cent 
of Total 


Total 


9,342 


100.0 


$17,978 


100.0 


Executives 


335 


r7 

O. O 


2,468 


13.7 


Salesmen 


1,562 


16.7 


6,253 


34.8 


Other Employees 


7,445 


79.7 


9,257 


51.5 


Source: Census 


of Distribution, 1929, 


"Motion Picture 


Films" (Trade 



Series, Distribution No. 1,7-201). 



Per Cent Salaries and Wages are of Total Expense 

In 1929 salaries and wages constituted the largest single item of 
expense, amounting to about one-half of total expenses for all types of 
exchanges. In both the producer and independent type of exchange, total 
salaries and wages accounted for about one-half the total expenses, but 
in the export exchanges, this percentage was somewhat less. (See Table 
XXVI, above.) 



8976 



-32- 



PART III: DISTRIBUTION 

Chapter III. Unfair Trade Practices 

Block Booking and Blind Booking . 

"Block "booking" and ""blind "booking", which involve the purchase of films 
sight unseen, has long been existent in the Industry. Producer-distributors 
have maintained that this method is economically sound, inasmuch as it assures 
exhibitors a continuous supply of films while at the same time stabilizing 
production. Individual selections, it has been claimed, would result in' 
prohibitive license fees, since all pictures are not box-office successes • 
The impossibility of pre- judging box-office attractions has also been pointed 
out. 

The opponents of block booking and blind booking, who are mostly indepen- 
dents, have claimed that these practices have forced them to show undesirable 
pictures These independents have had the sup-oort of social, religious, and 
educational organizations which have realized that independents would probably 
be ruined financially if they were to refrain from showing, yet be forced to 
pay, for all unendorsed pictures. 

The "right to buy" controversy appears to have been concerned primarily 
with preferential master contracts existing between oroducer-exhibitors. 
It has been alleged by independents that certain producer-exhibitors having 
competition in a specified area are given unfair advantage by being permitted 
to purchase films of other producer-exhibitors at lower prices than those 
at ^which the former's competitors are permitted to buy — if they are permitte 
to bu^/ a "k all* In return the latter producer-exhibitors received this low 
rate preference from the former when they have competition from independents 
in their areas. 

Independents who have thus been unable to compete with the large circuit 
and producer-affiliated theatres for the purchase of first-run pictures 
have been at a further disadvantage because of the fact that these producer- 
affiliated theatres have exchanged their playing time among themselves. This 
has resulted in forcing the independents to show subsequent run pictures. 

Hhile exhibitors have sought the "right to buy" first runs irrespective 
of the character of theatre, location, size, quality of accompanying presen- 
tations, or prestige and standing enjoyed in the community, producer-distrib- 
utors have claimed the "right to choose" their customers. They have sought 
to bring out their features under the most favorable auspices in theatres 
having established reputations and the best and finest quality presentation 
in the country. They claimed the right to determine the factors that go into 
a bargain, such as the financial responsibility of the buyer. 

It is- generally understood by the independents that the "right to choose 1, 
customers, provided no collusion exists, has been found justified by the 
Federal Trade Commission, as shown by the following quotation from Federal 
Trade Commission versus Paramount Famous Players Corporation, 57 Fed. 152: 

"A distributor of films by lease or sale has the 
right to select his own customers and sell such 



-33- 



quantities at given prices, or to refuse to sell at all 
to any particular person for reasons of his own. 
Federal Trade Commission versus Raymond Bros. -Clark Co., 
263 U. S., 565; U. S. versus Colgate, 250 U. S. , 30; 
Great A & P versus Cream O'^heat, 227 Fed. 46 (C.C.A.2)," 

Forcing Short Subjects with Features 

Forcing the purchase of short subjects as a condition for contracting 
of features has been a long-established -oractice in the Industry. Exhibitors 
have claimed that in some instances requirements were exacted which forced 
them to buy more shorts than they could reasonably be expected to show. Dis- 
tributors have contended that this was a long-established selling method and 
that their investment was based upon the "tying in" of the sale of short 
subjects. They have claimed further that the cost of features was directly 
related to the total sales made and that interference with the usual practice 
would result in an increase in the cost of features. Distributors claimed 
moreover, that they were providing the exhibitors with a well-balanced program. 

Overbuyin g 

It has been generally admitted that certain financially well-entrenched 
exhibitors have sometimes contracted for more motion pictures than they 
reasonably required for exhibition in their own theatres with the intent of 
depriving a competing exhibitor from securing sufficient pictures for exhibi- 
tion in his theatre. This practice has been generally recognized by the 
Industry as unfair. 



8976 



- ■ ■■ ■■■ 



~34~ 



PART III: DISTRIBUTION 
Chapter IV. General Information 

Trade Association Activity 

Film Boards of Trade, which. . constitute local distributor trade 
association, were established in 1922 as the field organization of the 
Motion Picture Producers and Distributors of America, These "boards exis 
in 32 key city exchange centers. 

The Film Boards keep sales managers advised of changes in theatre 
ownership. During the transition period from the silent to the sound 
pictures, the Boards supplied distributors with information relative to 
the equipment used tj various exhibitors. The Boards also locate lost 
and stolen films, check up on "nissouts, " determine responsibility for 
film mutilations and delayed returns of prints, and attend to various 
other routine matters in the interest of their members. 



8976 



PAHT IV: EXHIBITION 



Chapter I. The Nature of the Division 

History and Description of Division 

/The Deve lopme n t of Motion picture Theatres , - The exibition division of the 
i.lotion Picture Industry corresponds to the retail "branch of manufacturing in- 
dustries. It started with the "store-room" sho TT , composed of short-reel en- 
tertainment with 5 cents as an admission charge. The seating capacit3 r of 
these "store-rooms" was anywhere from 100 to 200. At a later date the seating 
capacity at "store-room" shows was enlarged from 200 to 300, and the enter- 
tainment program was lengthened. The -orice of admission was then raised to 
10 cents. 

Construction of buildings in great numbers, for the exclusive purpose of 
showing moving pictures soon followed. The seating capacities of these movie 
houses ranged from 300 to 600, and again the entertainment was lengthened and 
the price of admission increased, this tine to 20 cents. 

At this point, promoters entered into the business and adopted various 
methods of obtaining capital with which to build lavish theatres, some of which 
had seating capacities ranging up to 5,000 seats. The "building of these large 
"de luxe" theatres on a grand scale required substantial public financing, 
which meant that the promoters had to turn to bond issues and eventually to 
"Tall Street for the necessary financing. 

T he Development of th e^En tertainment Program . - The construction of de 
luxe theatres required more lavish motion pictures in order to operate the 
picture hous^ s prof it ably , and it thus "became necessary for theatre owners from 
different parts of the country to combine into operating units so as to obtain 
high-class entertainment to which they hoped to attract capacity audiences. 
As the size of the theatres was increased, programs were expanded to include 
additional entertainment, such as "presentations" consisting of symphony 
orchestras, ballets, and headline vaudeville acts. At the same time, the price 
of admission was increased to offset the added expense involved. 

Entrance of P rodu cers into the Exhibition Division . - The motion picture 
theatre owners almost from the beginning, formed cooperative buying groups in 
order to buy picture films for their theatres and to control if possible, 
prices and playing time,. The producers were sometimes required to sell at 
prices which these groups were willing to pay or else not sell at all. Finally 
to meet this situation, producers of motion pictures entered into the exhibi- 
tion field, while the great majority of the theatres are operated by indivi- 
duals and by independent chains a large proportion of the most important 
theatres is controlled by the producer-distributors. 

Classes of Exhibitors^ - The exhibition division of the Industry today is 
composed of three classes of exhibitors; namely affiliated, unaffiliated, and 
independent. Affilitated exhibitors include those operating a number of 
theatres, commonly called circuits, which are owned or controlled by the pro- 
ducer-distributors. Unaffiliated exhibitors include those who operate a cir- 
cuit of theatres but have no connection with producer-distributors. The re- 
maining exhibitors are called independents, (See Table XXXI, below.) 



8976 



Total Number of Theatres. 



As shown in Table XXVIII, the Film Daily Yearbook reported 16,885 motion 
picture theatres in the United States in 1934. 

Number of Theatres by Principal States 

While production of motion pictures is highly concentrated in a fen states, 
the market for films, which consists of all exhibiting theatres in the United 
States, is widely scattered. Table XXVIII indicates the distribution of 
theatres by principal states in 1934. The state of New York was the most im- 
portant in 1934, for it reported 9 per cent of the total number of theatres, 
Pennsylvania, and Ohio followed in close order having 6.6 per cent and 5,7 per 
cent respectively, California, which is the principal producing state, con- 
tained about 5 per cent of all theatres, 

TABLE XXVIII 



Number of Motion Picture Theatres, bjr Principal 

States, 1934 



State 


Number of Theatre 


s Per Cent of Total 


U. S. Total aj 


16,885 


100.0 


California 


875 


5 ? 


Illinois 


965 


5.7 


Indiana 


573 


3.4 


Iowa 


458 


2.7 


Kentucky 


420 


2.5 


Massachusetts 


499 


3.0 


Michigan 


570 


3.4 


Minnesota 


421 


2.5 


Missouri 


523 


3.1 


New Jersey 


427 


2.5 


New York 


1,539 


9.1 


Ohio 


985 


5.8 


Pennsylvania 


1,121 


6,6 


Texas 


930 


5.5 


Wisconsin 


484 


2.9 


Total, 15 States 


10,790 


63.9 


Total, Other States 


6,095 


36.1 


Source: Film Daily Yearbook of Motion Pictures 


, 1934. 


a/ This total figure 


does not agree with 


the total given by the Motion 


Picture Producers 


and Distributors of 


America which report 18,371 as 


shown in Table XXXI below. 





8976 



-37- 



Number of Theatres Open and Closed 

Table XXIX shows the total number of theatres from 1929 through 1935, and 
from 1932 on; the data are "broken down to show the number open and closed. It 
will be noted that in 1952, 4,627 movie houses out of a total of 20,100, or al- 
most 25 per cent, were closed. However, only 797, or 17 per cent, of those 
closed were sound-equipped theatres. In 1S33, out of a total of 19,311 
theatres, 5,895, or about 30 per cent, were closed, of which 2,170, or almost 
37 per cent, were equipped with sound. The over-exoansion in the number of 
theatres, their construction in unsuitable locations as real estate promo- 
tions, and the attendance by the public at the finer theatres only, resulted 
in the closing of a large number that had become obsolete or should never have 
been built. 

Although the proportion of closed thea.tres decreased from 1932 to 1935, 
the relative number of closed sound-e quipped theatres had increased. However, 
it must be borne in mind that the proportion of sound- equipped movie houses to 
the total has been increasing since 1929, until in 1935 these houses constitu- 
ted almost 90 per cent of all theatres. 

Seating Capacity 

Table XXX shows the total number of seats in motion picture theatres 
during the years 1931 through 1935. Since 1933, the number has remained, re- 
latively constant at slightly more than 11 million. 

The potential seating capacity of the Industry may be obtained by com- 
bining with the actual number of seats the average number of shows per day. 
Since some theatres give at least two shows per day, and most of them probably 
three or four shows per day, the potential daily capacity would be at least 
two or three times the actual number of seats. 



8976 



-38- 



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8976 



TABLE XXX 



Total Number of Seats in Motion Picture 
Theatres, 1931-1935 a/ 



Date 


Number or Seats b/ 


1931 


12,143,761 


1932 


10,767,000 c/ 


1933 


11,161,193 


1934 


11,028,950 


1935 


11,132,595 



Source: Data for 1931, 1932, and 1933 from Motion 
Picture Almanac, 1953 , p. 6; for 1932 as 
indicated in footnote _c/; for 1933, 1934, 
and 1935 from Film Board of Trade Reports. 



a/ As of January 1, each year; includes open 
and closed theatres. 

b/ It will be noted that the total number of 
seats is not identical with those given by 
the source cited in Table XXXII, below. 

cj Standard Statistics Company, Standard Trade 

and Securities , "Theatres and Motion Pictures," 
Vol. 75, No. 22 (February 20, 1935), p. TH-46. 

Number of Theatres and Number of Seats Classified by Type of Ownership 

Although, as shown in Table XXXI, affiliated circuits owned on an average 
about 11 per cent of the total number of theatres during the years 1933-1935, 
they owned or controlled about 25 per cent of the total number of seats, as 
shown in Table XXXII. This indicates that this group owned large theatres. 
The unaffiliated circuits avera.ge about 16 per cent of the number of theatres, 
but they represent approximately 23 per cent of the total seating capacity. 
Theatres of large seating capacity are also found among the unaffiliated cir- 
cuits, but independents, who ovm or control aoproximateljr 72 per cent of the 
total number of theatres, account for a little more than 50 per cent of the 
total seating capacity. 

This is significant because of the competition within the Industry between 
these three groups. The unaffiliated circuits are usually well entrenched and 
in a powerful bargaining position in the purchase of films. The independents, 
who are widely scattered, are usually in a. relatively poor bargaining position 
when their theatres happen to be located in close proximity to the affiliated 
or unaffiliated circuits. Independents located in non-competitive areas, how- 
ever, are often in good bargaining positions in the purchase of films. 



8976 



-40~ 



TABLE XXXI 

Number of Motion Picture Theatres, Classified "by Type 
of Ownership, 1933-1935 



Total Circuit Theatre s Independent Theatrec - 

Year Numher Per Cent Affiliated Unaffiliated 

of Total Num- Per Cent Num- Per Cent Numher Per Cent 

her of Total her of Total of Total 



1933 19,251 100.0 

1934 18,371 100.0 

1935 18,263 100.0 



2,266 11.8 3,189 
1,954 10.6 2,846 
2,073 11.4 3,070 



16.6 13,796 71.6 
15.5 13,571 73.9 
16.8 13,120 71,8 



Source: Motion Picture Producers and Distributors of America, Inc., as of 
January 1, each year. 

TABLE XXXII 

Number of Motion Picture Theatre Seats, Classified "by Type 
of Ownership, 1933-1935 



Tear To tal ^ Circuit t Independent 

Numher Per Cent Affiliated Unaffiliated Num- Per Cent 

(000* s) of Total Theatres Theatres m her of Total 

Hum- Per Cent Mum- Per Cent (000's) 
her of Total her of Total 
(000' s) (000' s) 



1933 11,086 100.0 

1934 11,029 100.0 

1935 11,032 100.0 



2,938 26.5 2,562 
2,587 23.5 2,493 
2,719 24,4 2,539 



23.1 5,586 50.4 

22.6 5,949 53.9 

22.8 5,874 52.8 



Source: Motion Picture producers and Distributors of America, Inc., as of 
January 1, each year. 

a/ It will he noted that the total numbers of seats is not identical with 

those given hy the source cited in Table XXX ahove. 

Total Theatre Receipts and Attendance 

The total estimated "box-office receipts from 1929 through 1934, inclusive, 
are shown in^Tahle XXXIII. Receipts fell from $1,100,000,000 in 1929 and 1930 
to approximately half this amount in 1933. fflhile average estimated admission 
prices fell from 30 cents in 1929 to 28 cents in 1930, the increased attendance 
was sufficient to keep the total estimated receipts at the 1929 level, namely, 
$1,100,000,000. The estimated average admission price fell from 30 cents in 
1929 to 20 cents in 1933 and 1934, or a drop of one-third. 



8976 



TABLE XXXIII 



Estimated Total Box-Office Receipts, Average Admission Price, 
and Attendance, 1929-1934 



Year 


Total Receipts 
(in millions) 


Average 
Admission 
Price 


Attendance a/ 
(in millions) 


1929 


$1,100 


.30 


3,660 


1930 


1,100 


.28 


3,920 


1931 


880 


.24 


3,330 


1932 


625 


.22 


2,840 


1933 


560 


.20 


2,800 


1934 


650 


.20 


3,250 



Source: Standard Statistics Company, Standard Trade and Securities , "Theatres 
and Motion Pictures," Vol. 75, No. 22 (February 20, 1935), p. TH-46. 

a/ These figures are not consistent with the average weekly attendance 

figures given "by the Film Daily Year Book, 1935 , presumably becaixse 
the latter source has a more complete coverage than that of the 
Standard Statistics Company. 

Theatre Receipts "by Principal States 

Receipts "by ten principal states are shown "below in Chapter II, Table 
XXXVIII, as reported by the Census of American Business for the year 1933. 
New York State accounted for 23 per cent of the total receipts reported in 

1933, although, as shown in Table XXVIII, above, it contained only about 9 
per cent of the total number of theatres in 1934. The ten principal states 
together accounted for more than 70 per cent of the total receipts in 1933, 

Competition with Other Industries 

Aside from competition between various types of theatres within the In- 
dustry, motion picture theatres compete with radio broadcasting, sports, and 
other aEiusements, such as the burlesque industry and the legitimate theatre. 
Moreover, there exists a type of so-called non- theatrical competition wherein 
schools, churches, lodges, and sometimes business concerns, display films to 
the disadvantage of local exhibitors. No figures are available as to the ex- 
tent of competition from these sources. 

Expenditures for Theatre Construction 

Table XXXIV shows the rapid decrease in annual theatre construction from 
$163,559,000 in 1929 to $13,500,000 for the 16 months covering 1933 and the 
first 4 months of 1934. The figure of $20,000,000 for the 11 months from May, 

1934, to April, 1935, indicates the beginning of more activity in theatre con- 
struction. The biggest decline came in 1932 when construction dropped 61 per 
cent. 



8976 



..... 



-42- 



TABL2 XXXIV 



Annual expenditure in Theatre Construction, 
1929-March, 1935 



Year 






Amount 
(COO's) 


Per Cent 
Change from 
Preceding 
period 


1929 






$163,559 




1930 






97,580 


-40.3 


1931 






45,000 


-53.9 


1932 






17 , 500 


-61.1 


1935, - April, 1934 


L (16 


months ) 


13,500 


-22.8 


May, 1934 - March, 


1935 


(11 months) 


20,000 


J.48.1 



Source; Motion Picture Almanac . 



Financial Condition 

Table XXXV shows the latest available data concerning financial condi- 
tions of exhibiting corporations reporting to the Bureau of Internal Revenue 
for the years 1927 through 1932. The peak of earnings for all corporations was 
reached in 1930, when net profits amounted to almost $30,000,000. However, 
the year 1931 saw a decrease of about 87 per cent in profits from the 1930 
peak. In the year 1932 motion picture theatres operated at a loss of more 
than $59,000,000 

TABLE XXXV 



Gross Income, Net Profit or loss, 
1927-1932 
(in thousands) 



Year 


Gross Income 


Net Profit or Loss 


1927 


$345,771 


$18,951 


1928 


407,842 


21 , 646 


1929 


508,439 


22,394 


1930 


513,105 


29,743 


1931 


434,652 


4,423 


1932 


505,490 


-59,336 



Source; Bureau of Internal Revenue, Statistics of Income . 



8976 



-43- 



PART 17: EXHIBITION 
Chapter II. Labor Statistics 

Number of Employees 

Census data for the years prior to 1933 are not available on employment 
and wages in the exhibition branch of the Industry. Table XXXVI, taken from 
the Census of American Business, 1933, shows the total number of employees 
and the average number employed per motion picture theatre. The figure of 
6.9 for the average number employed per theatre is lower than that reported 
by the Bureau of Labor Statistics in a study made of eleven neighborhood 
theatres in Washington, D. C, in the latter part of 1931, when an average 
of 10.7 employees per theatre was reported (See Table XL, "below). However, 
according to figures given in trade publications such as the Film Daily s 
Variety , and Motion Picture Almanac , theatres have been reported to average 
about 16 employees. It is considered that the average for the entire 
country approaches the latter figure as reported by the trade publications, 
especially since the higher figure is further supported "by the fact that 
employees such as musicians, vaudeville talent, and office employees were 
omitted from the Washington survey. 

TABLE XXXVI 



Annual Average Number Employed, Pull and Part-Time, 
"by Types of Theatres, 1933 aj 



Total 


Pull-Time 


Part-Time 


Average 












Employees 


Type of Theatre Num- 


Per Cent 


Num- Pel 


' Cent 


Num- Per Cent 


per 


ber 


of Total 


her of 


Total 


ber of Total 


Theatre 


Motion Picture only 65,728 


100.0 


54,030 


82.2 


11,698 17.0 


6.9 


Motion Picture and 












Vaudeville 8,635 


100.0 


7,924 


91.8 


711 8.2 


13.4 


Total Theatres showing 












Motion Pictures 74,363 


100.0 


61,954 


83*3 


12,409 16.7 


7»3 



Source: Census of American Business. 1933 . "Service, Amusements, and Hotel s, 1 ' 



a/ Includes proprietors. 

Total Annual Payrolls 

Table XXXVII shows total payrolls for moving picture theatres in 1933. 
Por all types of motion picture houses, full-time payrolls amounted to 94 
per cent of the total. 



8976 



-44- 

TAB1E XXXVII 

.otal Payrolls, Full and Part-time, "by Types of Theatres, 1933 



Type of Theatre 



Total 



Pull- Time 



Part-Time 



Amount Per Cent Amount Per Cent Amount Per Cent 
(000' s) of Total (000' s) of Total (000' s) of Total 



Motion Picture 

only $71,451 
Motion picture and 

Vaudeville 10,305 

Total Theatres Showing 

Motion Pictures 81s, 756 



100.0 $67,009 93.8 $4,442 6.2 
100.0 10,053 97.5 252 2.5 

100.0 77,062 94.2 4,694 5.8 



Source: Census of American Business, 1933 . "Service, Amusements, and Hotels." 

Total Annual Payrolls as a Per Cent of Total Receipts 

According to estimates of the Motion picture Almanac for 1933, payrolls 
in the exhibition division represent about 25 per cent of total theatre 
receipts. This figure is slightly higher than that derived from receipts 
and payroll data reported "by the Census of American Business in 1933, which 
listed receipts as $415,153,000 (see Table XXXVIII, "below) , and a total, full an< 
part-time payroll of $81,756,000, which represents approximately 20 per cent 
of total receipts. (See Table XXXVII, above.) 

Number of TJage Earners and Total Annual Wages by Principal States 

Table XXXVIII shows the distribution of full-time employees and payrolls 
by ten principal states, as reported by the Census of American Business in 
1933. The ten states listed employed almost 67 per cent of all the full-time 
employees in that year and paid them 73 per cent of the total payroll. The 
state of Hew York employed 18 per cent of all full-time workers, but reported 
26 per cent of the total full-time payroll, which indicates high average 
wages in that state, California was second with more than 8 per cent of 
total employees, who received 8 per cent of the total payroll. Hew York also 
received the largest share of theatre receipts, amounting to 23 per cent of 
the total. 



8976 



-45- 



TABLE XXXVIII 

Total Receipts, Number of lull-Time Employees arid Payrolls, 
Classified "by 10 Principal States, 1933 a/ 



Total Receipts Full-Time Employees Full-Time Payroll 



Amount Per Cent Number Per Cent Amount Per Cent 
(000' s) of Total (000' s) of Total (000' s) of Total 



U. S. Total 


$415,153 


100.0 


63,136 


100.0 


$80,519 


100.0 


California 


35,223 


8.5 


5,220 


8.3 


6,284 


8*3 


Illinois 


23,106 


8.0 


4,303 


6.8 


6,695 


8.9 


Massachusetts 


22,809 


5.5 


3,678 


5.8 


5,141 


6.8 


Michigan 


14,124 


3,4 


2,324 


3.7 


2,925 


3.9 


Missouri 


10,256 


2.5 


1,601 


2.5 


2,370 


3.1 


New Jersey 


19,179 


4.6 


12,116 


3.4 


3,647 


4.8 


New York 


93,90? 


22.6 


11,463 


18.2 


19,778 


26.1 


Ohio 


20 , 730 


5.0 


3,822 


6.1 


4,223 


5.6 


Pennsylvania 


30,891 


7.4 


4,889 


7.7 


5,588 


7.4 


Texas 


12,825 


3.1 


2,548 


4.0 


2,200 


2.9 


Total, 10 States 


293,050 


70.6 


41,969 


66.5 


58,851 


73.1 


Total, Other States 


122,103 


29.4 


21,167 


33,5 


21,668 


26.9 



Source: Census of American Business. 1933 , "Services, Amusements, and The- 
atres. 11 

a/ The data include 122 legitimate theatres and operas which grossed 
$8,611,000 and employed 1,182 full-time workers with a payroll of 
$3,457,000. When allowance is made for the inclusion of those 
legitimate theatres and operas, the employee and payroll data in 
this table are identical with those given in Tables XXXVI and 
XXXVII, above. 

Wages and Hours 

In Principal Cities . - Reports on wages and hours of unionized projection- 
ists in 1933 were published by the Bureau of Labor Statistics in the Monthly 
Labor Review for May, 1933. The report, which embraces almost 230 cities and 
5,494 operators, shows that average weekly wages ranged from $22.50 to $95.00. 
Prevailing hours ranged from 23 to 62 hours per week. 

An analysis of the report discloses the distribution of weekly union wage 
scales and hours worked per week shown in Table XXXIX. These ranges vary 
primarily with the strength of the union in particular localities rather than 
with the size and type of theatre, size of city, or section of the country. 
It is believed that wages and hours of work of other organized workers (stage 
hands and musicians) in the motion picture theatres would show a similar 
variation, depending upon the strength of the union. 



8976 



-46- 



TABLE XXXIX 

Wage Scales and Hours Worked per Week "by Unionized 
Projectionists, Classified "by Number of Cities, 1933 



Item Number of Cities 

Wage Scale 

Under $35 per week 25 

Between $35 and $45 75 

Between $45 and $65 111 

Over $65 29 

Hours Worked per Week 

Under 36 45 

Between 36 and 40 43 

Between 40 and 45 35 

Between 45 and 50 44 

Over 50 25 



Source: Compiled from Bureau of Labor Statistics 
Monthly Labor Review , (May, 1933) p. 1111. 

In Washington. D. C. - Table XL shows the hourly wage rate and hours 
worked per week by the various classes of wage earners employed in eleven 
neighborhood theatres in Washington, D. C. in the latter part of 1931. 1/ 
The average weekly hours for all types of full-time employees ranged from 
32.5 to 49 hours per week; for all types of part-time workers, from 8 to 24 
hours. In the service branch, weekly wages for full-time employees ranged 
from $9,28 to $18.40; for part-time employees, from $6.65 to $8.55. Tech- 
nicians such as operators, electricians and engineers were the highest paid 
help and averaged about 45 hours per week. 



1/ The Bureau of Labor Statistics reports that the city of Washington was 

chosen for this survey "because of the belief that this city has been af- 
fected less than any other city of its size by the business depression, 
and it would therefore be possible to segregate the effects brought about 
by the changes in technology from those due to other causes, and especi- 
ally to the depression." 

8976 



I 



-47- 



TABLE XL 

Average Weekly Hours and Wages of Employees in 11 
neighborhood Motion Picture Theatres of Washington, D. C. 
by Branch of Work and Occupation, 1931 



Branch of work 


Num- 


Num- 


Aver- 


Aver- 


Aver- 


and Occupation 


ber 


ber 


age 


age 


age 




of 


Em- 


Hours 


Wages 


Wages 




'Thea- 


ployed 


per 


per 


per 




ters 




Week 


Week 


Hour 


Service 












Cashiers 


ll 


11 


38.6 


$14. 61 


fpO.o (o 


Relief Cashiers 


3 


3 


12 3 


6.65 


.540 


Doormen 


11 


13 


33.6 


10.11 


.300 


Full-time Ushers 


11 


31 


32.5 


9.28 


.285 


irarn— T/Xme usners 


1 


rj 

o 


24. U 


o . Do 


• ODD 


Matrons 


2 


2 


39.0 


13.53 


.346 


"D r\ T» 4" a Y» r* 


ll 


lo 


D^ke O 


lo . 4fcU 


'T.'XP. 
. OOD 


Cleaners 


2 


3 


37 c 3 


12.66 


.339 


Elevator boys 


1 


1 


44.0 


14.25 


.323 


irXC),JtJLyUj.OIJ 












Operators 


11 


24 


40.0 


67.10 


1,677 


Relief operators 


2 


2 


8.0 


17.00 


2.125 


Music Organists 


1 


1 


42.0 


75.00 


1.785 


Stage 












Electricians 


1 


2 


48.0 


70.00 


1.458 


Relief electricians 


1 


1 


16.0 


20.00 


1.250 


Maintenance 












Engineers 


1 


1 


49.0 


33.25 


.678 


Watchmen 


1 


1 


56,0 


19.00 


.339 



Total Number Employed 117 
Average per theater 10-7/11 



Source: Bureau of Labor Statistics Monthly Labor Review , (November, 1931) 
p« 5, 



8976 



-48- 



Table XII shows the average weekly wage of full-time projectionists and 
"service" employees in the various types of theatres in Washington, D. C, 
Cashiers in downtown de luxe picture houses, labelled Type 1, averaged 
$21,85 while in "other colored" theatres, Type 7, they averaged only $10.00 
per week. Projectionist operators in Type 1 theatres averaged $96.67, while 
in Type 7 they received $31.00. 

TABLE XLI 

Average Weekly Wages in Different Types of Motion 
Picture Theatres of Washington, D.C. , "by Branch 
of Work and Occupation, 1931 



Branch of Work Theatre Types a/ 



and Occupation 


1 


2 


6 


4 


5 


6 


7 


Service 
















Cashiers 


$21.85 


$19.08 


$14.57 


$14.61 


$10.70 


$14.33 


$10.00 


Doormen 


22 33 


21.15 


20.00 


10.11 


11.15 


16.08 


11.22 


Ushers 


17.18 


15.81 




9.28 


8.85 


11.23 




Porters 


19.57 


19.32 


11.70 


18.40 


13.63 


18.35 


18.12 


Matrons 


10.46 


11.70 




13.53 


9.00 






Projection 
















Operators 


96.67 


83.55 


50.00 


67.10 


41.47 


47.33 


31,01 



Source: Compiled from Bureau of Labor Statistics, Monthly Labor Review 
(November, 1931), pp. 4-6. 

a/ Theatre types are defined as follows: 

Type 1 - Down-town de-luxe presentation houses. 

" 2 - Down-town first-class straight-picture houses. 

" 3 - Other down straight-picture houses. 

" 4 - First-class neighborhood straigt-picture houses., 

11 5 - Other neighborhood straight-picture houses. 

" 6 - Colored first-class picture houses. 

" 7 - Other colored picture houses. 



8976 



PART IV: EXHIBITION 



Chapter III. Materials 

Hunber of Pilm.s Used 

De luxe theatres usually exhibit no nore than 50 feat-are pictures during 
the "ear, while the better neighborhood theatres generally exhibit from 100 to 
150 features, Both these types of theatre show each year approximately truce 
as many short subjects as features. These short subjects consist of comedies, 
cartoons, and travelogues, etc., but do not include news films. 

In other neighborhood theatres, where features are changed three times 
a week, approximately 150 are required annually. In recent years there has 
developed the practice of showing two features during a program, and this has 
greatly 7 increased the number of films used per year. 

Per Cent of Consumer's h'otion Picture Dollar Soent on Film Rental 

Ho accurate data are available as to the total expenditures of exhibitors 
for film rentals. According to Table XLII, the cost of producing films ac- 
counts for a little more than 18 per cent of the consumer's moving picture 
dollar, and distribution costs amount to almost 8 per cent. 'This makes a 
total of 26 per cent which may be taken as a rough indication of the proportion 
of the consumer's dollar spent on film rental. 



§976 



-SO- 



TABLE XL 1 1 

Per Cent of the Consumer' s Motion Picture Dollar 
Accounted for "by the Chief Divisions of the 
Industry, 1933 



Division Per Cent 

of Total 



Production 

Plajrers 4.5 

Directors and Cameramen 2.4 

Sets 1.8 
Costumes .5 
Location .5 

Parr Film 1.4 

Stories and Scripts 2.9 

Administration 4.2 



Total Production 18.2 

Distribution 

Branch Expenses 3.6 

Print Cost 1.6 

Eome Office Expense 2.6 



Total Distribution 7.8 

Exhibition 

Payroll 24.7 

Advertising 8.2 

Depreciation and Maintenance 5.1 

Rent, Real Estate, and Taxes 15.4 

Other Taxes and Insurance 2.1 

Electricity and Heat 5.1 

Other Expenses 8.3 

Interest and Profit 5.1 



Total Exhibition 74.0 
Total for Industry 100.0 



Source: Motion Picture Almanac, 1953 • 



8976 



-51- 



. PAST IV. EXHIBITION 
Chapter IV. Unfair Trade Practices 

Clearance and Zoning 

Equitable clearance and zoning has been, and still remains, a most con- 
troversial problem within the Industry, Eeature films, which open in large 
cities for as much as $5,000 per week, may eventually return to those sane 
cities for $25.00 Pirst-run exhibitors, paying large license fees and charging 
high admission prices, have complained that insufficient time elapses between 
the first-run of a feature picture at a large theatre and subsequent runs in 
smaller theatres. Claims have been made that the payment of large fees en- 
titles then to the wrotection of showing pictures without the fear that smaller 
theatres may present the same film so soon after the first showing, that pros- 
pective patrons would be inclined to wait for the lower admission prices on 
subsequent rims elsewhere. 

On the other hand, subsequent- run exhibitors have claimed that the major 
exhibitors receive unreasonable clearance of time between first and subsequent 
showings, and also that the large exhibitors have exacted rights over unreason- 
ably large areas. 

Othe r Unfair Trade Practic es 

host exhibitor contracts with distributors contain provisions that the 
exhibitor will charge specified admission prices aid the cost of the license 
to show the picture is based on these prices. Exhibitors, although publishing 
these prices, have often materially lowered them by offering gifts or preninmsj 
by holding lotteries, or by instituting a policy of throw-away tickets or two- 
for-one admissions. Once started, these practices spread throughout an entire 
competitve area and exhibitors have vied with each other in making more ex- 
travagant offers. 

The practice of showing two feature films for one admission price was an 
extremely controversial subject during pro-Code discussion. Social, religious, 
ana educational organizations protested that this policy of having a double- 
feature program absorbed screen tine which would otherwise be given over to the 
showing of travelogues and other educational short subjects. Some independent 
exhibitors claimed that the elimination of this policy would deprive then of 
their only means of competing with the larger moving picture theatres. This 
practice, which spread rapidly in any territory where it was initiated, was 
soon adopted by the larger as well as the smaller theatres. 

Exhibitors as a group have considered unfair the leasing of films to non- 
theatrical accounts, i. e., to social, religious, and educational organizations 
which exhibit motion pictures such a.s travelogues, religious pictures, comedies, 
and educational short subjects* 

Exhibitors have claimed that discrimination has been used in the applica- 
tion of "score" charges. These charges are a hangover from the early days 
when "scored music" was sold in conjunction with pictures. r hen sound record- 
ing was introduced the "score" charge was continued, being included in the 
cost of the disc or sound track. 



8976 



Trade Associations 



Th e Hot ion Picture Theatre Owners of America ( V P T 1. - This 
association was organized in 1920 by independent theatre ovmers to combat the 
theatre expansion policy pursued "by Famous Players Lasky Corporation. 

The organization is composed of several state and regional groups operat- 
ing as independent associations. The national organization o„ttempts to coordi 
nate activities and provide uniform action on problems of major inportance to 
exhibitors. It nay roughly "be stated to represent at least 2,500 of the af- 
filiated theatres. 

In 1927, "because of the expressed belief that more constructive accom- 
plishments could be secured by constructive cooperation rather than open 
hostility, producer-distributor theatre owners were granted membership. The 
organization immediately "became financially dependent upon these new members 
and control passed from the hands of the independents to the new group. 

Allied States Association of Motion Picture Exhibitors . - This Associa- 
tion was originally formed in 1923 as a protest against some of the practices 
of the Motion Picture Theatre Owners of America. It was fashioned after the 
M.P T A. and in many instances regional groups simply transferred their al- 
legiance from one organization to the other. In 1926, following a promise by 
the II ? T _-. to serve the interests of the independent exhibitors primarily, 
Allied States voted to disband and affiliate with the former. Two veoxs later 
certain prominent independent exhibitor members of the original Allied groiro 
decided to reorganize. 

In 1932 Professor Lewis Howard reported that Allied States represented 
6,000 theatres. It is generally conceded by the Industry that the larger 
circuits are represented by the ii ? T A, and the smaller theatres by Allied 
States. 

Trade Union Activity 

International Alliance of Theatrical Stage Employees and Motion Picture 
Machine Q-oerators of the United States and Canada . - This union was composed 
of approximately 26,000 members in 1934, according to a statement made in 
that year by its Assistant President, Louis Krou.se . It is affiliated with 
the American Federation of Labor and its members are the skilled employees in 
the Industry. The organization is composed of a number of local unions 
throughout the United States and Canada. 



8976 



-53- 
APPEHDIX 

Exhibit A, Persons Qua lified as Expe rts o n the Entire Industry 



Will H. Hays, President, Motion Picture Producers & 

Distributors of America, Inc., 
28 West 44th Street, Hew York, Hew York 

David Palfreyman, Theatre Service Division, Motion Picture 

Producers & Distributors of America, Inc., 
28 West 44th Street, Hew York New York 

Sol A. Rosenblatt, former Division Administrator, MBA, 

International Bo.il ding, Radio City, Hew York 

former Secretary of the Code Authority, 

now connected with Variety, Inc. , 
154 West 46th Street, ITew York, New York 

former 'Counsel for the Code Authority, 

now connected with Metro-Goldwyn-Mayer, 
Legal Department, 
Hew York, New York 

represented Independent Exhibitors on Code 

Authority, 
Pall River, Massachusetts 

President, Motion Picture Theatre Owners of 
America; also represented Independent 
Exhibitors on former Code Authority, 
1600 Broadway, Hew York, ITew York, and/ or 
Columbus, Mississippi 

Abram E. Myers, Chairman of Board and General Counsel for 

Allied States Association of Motion 
Picture Exhibitors, 
729 15th Street, H.W. , Washington, D. C. 

John P. Knight, Maintenance Executive, Paramount Theatres 

Service Corporation, 
Times Square, Hew York, Hew York 

Pat Casey, Producers' Representative for Studio Labor, 
1600 Broadway, Hew York, Hew York, and/or 
5504 Hollywood Blvd., Hollywood, California 

George Browne, President, International Alliance of Theatrical 

Stage Employees and Motion Picture Machine 
Operators of the United States and Canada, 
Earle Theatre Building, Washington, D. C. 



John C. PI inn, 



Tjrree Dillard, 



Nathan Yamins, 



Ed Kuykendall, 



8976 



■54- 



Louis ICrouse, Assistant President, International Alliance 

of Theatrical Stage Employees and Motion 
Picture Machine Operators of the United States 
and Canada, 
Earle Theatre Building, Washington, D. C. 

Steven ITewman, International Representative, International 

Alliance of Theatrics,! Stage Employees and 
Motion Picture Machine Operators of the 
United States and Canada, 
3671 Valley Brink Road, Los Angeles, California 

Joseph TJeher, President, American Federation of Musicians, 
1450 Broadway, Hew York, Hew York 

Prank G-iimore, President, Actors Equity Association and Chorus 

Equity Association, 
45 West 47th Street, Hew York, New York 

Professor M. P. McNair, Disinterested authority on the Industry, 

Harvard Bureau of Business Research, 
Cam d r i dge , Mas sachuse 1 1 s 

Professor Howard T. Lewis, Disinterested authority and historian 

on the Industry, 
Harvard Graduate School of Business, 
Cambridge, Massachusetts 

Terry Ramsaye, Editor, Motion Picture Herald; Writer, historian 

and authority whose works have "been 
regarded "by subsequent historians as 
original. 



897S 



-55- 

APPEHDIX 

Exhibit B. The Advent of So-mid, in Motion Pictures 

Sound, in Exhibition 

The advent of sound in 1926 caused a revolution in the Industry 
comparable with the introduction of the feature picture in 1913. The 
development sud.denly changed the entire business and revived a failing 
interest in motion picture entertainment. The tremendous influence of 
good music later brought to sound- equipped theatres a large increase in 
patronage. At first only shorts were synchronized with sound reproduced, 
from discs. Companies moved cautiously to make the transition to sound 
as gradual as possible, presumably because of the large technical changes 
involved.. 

Warner Brothers' Vitaphone ushered in the present commercially 
successful innovation in August, 1926. Eox closed a contract with Western 
Electric for the development of Movietone in January, 1927, which led. to 
a cross-licensing arrangement with Vitaphone. A simple attachment to the 
projectors was developed by which Vitaphone and Movietone equipment could, 
be used interchangably. Subsequent cooperation of General Electric, 
E. C. A. and Western Electric with major producers brought quick progress* 
Cost of equipment for reproduction was constantly decreased, due to the 
Industry's knowledge that small- theatre installations were necessary to 
the success of sound, pictures. Eox "caught" the Lindbergh takeoff for the 
solo flight to Paris for the Movietone Hews. The "covering" of the 
Lindbergh reception in Washington with sound newsreel made history. How- 
ever, the distribution of the newsreel was restricted, due to the limited 
number of wired houses. 

Marketing of the Western Electric equipment by Electrical Research 
Products began in August, 1927, offering the systems which embraced sound- 
on-film, sound- on- disc, and non- synchronous disc systems. Installation 
costs ranged from $8,000 to $15,000 in price, depending upon the theatre 
and its accoustical requirements e 

Meanwhile, Warner Brothers had secretly prepared an all-dialogue 
picture entitled. "The Lights of Hew York." Experiments up to this time 
had includ.ed. mostly sound effects and music with only scatterings of 
dialogue. Vitaphone and Movietone Hews, as short "all talkers," had been 
tremendously successful, Fnile successfully received throughout the 
country, "The Lights of Hew York" clearly demonstrated that the most rigid 
care had to be exercised in the selection of words given the characters to 
speak. Voices which would synchronize were necessary. Stars began to 
worry about lessons in elocution. 

Wired, theatres prospered while unwired houses were not even given 
proper exploitation advantages. Exhibitors were fretful concerning the 
oft-arising question of interchangeaMlity< OH which the patent holders 
refused clearly to commit themselves although well-informed sources had 
conceded, it to be no problem, provided reproduction standards and quality 
were satisfactory. 



8976 



-56- 



The year 1929 found sound pictures off to an auspicious start, due 
to the announcement of lower prices by Western Electric for either the 
Vitaphone or Movietone reproduction equipment for June 1st delivery at a 
price of $5,500 each, or $7,000 for "both. At the end of 1929, wired 
theatres numbered 9,350. Will H. Hays estimated that theatre attendance 
increased 15,000,000 weekly during the year. 

Sound in Production 

The introduction of sound in production caused a change in style 
of making pictures, the erection of more than 100 sound stages, and the 
installation of millions of dollars in equipment. Old talent was 
eliminated in numerous instances and new talent introduced. An addition 
of approximately 5,000 employees was reported at the end of 1930. It 
has been estimated that 99 per cent of all pictures produced in 1930 were 
either sound or all-talking pictures. 

The cost of making a picture with sound was estimated to be from 
five to seven times the cost of making an all-silent picture. The 
increased overhead, loss of "box-office names of players who had starred 
in silent pictures, employment of additional writers, loss of time through 
experimentation, and the use of more film were the major contributing 
factors. 

At the end of 1930, 60 per cent of the exhibitors were using the 
sound-track method of projection and the remainder were using the disc 
method. Until late 1930, Warner Brothers and First National were 
producing all pictures on discs, but in that year they began to use the 
sound-track method. The disc method has the disadvantage that the discs 
are cumbersome and hard to handle, and the method is also more expensive. 

According to the Mot ion Picture Daily of July 29, 1935, 18 patent 
licenses for a new sound system have been issued. The invention is known 
as "the dynamic multiplier system," by which the undesirable character- 
istics of present sound apparatus are eliminated. More life-like quality 
is effected, which may again revolutionize the Industry. 



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